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Over the past six months there have many statistical indications that the housing market has not only found a solid floor but is also gaining traction and upward momentum. But with unemployment still disturbingly high and the overall economy lackluster, LGBT home shoppers have plenty of compelling reasons to maintain their sense of wariness and skepticism. Many are justifiably ambivalent and have been sitting on the sidelines, waiting for a clear signal that the worst is over and that sustainable stability is returning to the real estate market..
There is no shortage of bad news in the world, especially in terms of the global economy. But there is also good news for those who are eager for some definitive guidance regarding the value of American real estate. LGBT buyers will find lots of level-headed insight, for example, in recent statements and well-informed predictions made by some of the country’s leading real estate economists..
Lawrence Yun, Chief Economist for the National Association of Realtors, explained in the Wall Street Journal that “given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly.” Mortgage rates are currently at historically low levels and a qualified homebuyer can find safe and predictable fixed rate loans for about 4.25 percent interest. That’s a steal. But pair that with housing affordability and a generous inventory to choose from and the buying opportunity is virtually unprecedented..
“Fifteen metropolitan areas in the 20-City Composite Index experienced annual house price growth in June, compared to 13 in May and 11 in April,” Amy Crews Cutts, the Deputy Chief Economist at Freddie Mac recently told reporters. “Home prices rose 2.3 percent between the first and second quarter of this year,” she added, “reaching the highest level since the fourth quarter of 2008, according to the Standard & Poor’s Case-Shiller National Home Price Index.”.
Meanwhile Karl Case – a professor emeritus of economics at Wellesley and the co-creator of that widely respected Case-Shiller housing index –recently told an interviewer on National Public Radio that this is definitely the best time to buy within the last four or five years. But what is even more significant is that Case said that although it is still too soon to tell, this may be the best time to buy a home that he has seen in his entire lifetime..
As Case explained, “Do the math. Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. In addition, the down payment would be $42,600 instead of $60,000.”.
LGBT buyers should be encouraged and excited by those statements, but they should also heed the advice that Professor Case gave regarding the importance of being selective and realistic. He pointed out that at no time in history has it been smart to buy more house than a person can comfortably afford, or to pay more for a house than it is actually worth..
Before the housing bubble burst, for example, many LGBT buyers thought that they should purchase the most expensive house possible, because that would give them a larger profit when they sold it two or three years later. Many ended up with homes they could not afford because they saw the purchase as a get-rich-quick scheme, not a long term investment..
But as Case explained, when a person pays a decent price and buys a home that they can reasonably afford they have lots of built-in protection. The house may lose value in a bear market but they still have a home to call their own, and that represents a tremendous amount of personal security. If the same person invests their money in the stock market and the stock market collapses they can lose everything and have nothing to show for it. “Consider it this way,” said Case. “When Enron went belly up, shareholders ended up with nothing, but when the housing market drops, homeowners still have a house.”.
Case also pointed out that a big part of the yield on any investment in a house is capital gains that the homeowner captures if he or she sells in the future for a higher price. Those gains can be substantial, especially for LGBT buyers who invest while prices are still exceptionally low in the wake of the housing recession. Plus those gains are usually completely exempt from taxation as long as the home was used as a primary residence. Payments of mortgage interest also offer one of the best tax deductions, and that only adds to the attractive return on investment that is possible through home ownership..
To find real estate professionals devoted to serving the LGBT community, visit www.GayRealEstate.com, or call toll free 1-888-420-MOVE (6683). The site is home to the largest online network of LGBT Realtors in the world..