Do You Have the Courage to Buy into this Housing Market?

According to Gail Cunningham of the National Foundation for Credit Counseling,”almost half of all American adults no longer believe that home ownership is a realistic way to build wealth.”

“Given that home ownership is a cornerstone in almost every wealth-building plan, this is astonishing. Even if the days of selling a house for an enormous profit are over, building equity in a home beats the pants off paying rent.”

In most cases home ownership is better than renting. “Building a little bit of equity makes it worth the cost of ownership, especially when you add in the tax breaks associated with owning a home.”

On the other hand, some of the statistics about home ownership are disconcerting. For example,”one-third of those surveyed don’t believe they’ll ever be ableto afford a home and 42% of those who once purchased a home, but no longer own it, don’t think they’ll ever be able to afford to buy another one.”

Regarding the problem that the large number of short sales are causing in the housing market, Karim Rahemtulla offers tips to both house-hunters looking for bargains and investors looking to “buy on fear.”

“If you’re considering buying a property – either as a primary residence, investment property, or vacation home – now is probably a good time to start looking. Desirable vacation and retirement spots such as Southern California, Miami and Naples, Florida, Pheonix, Arizona, and Las Vegas, Nevada have suffered a particularly bad beating and likely contain some desperate sellers and foreclosed properties.”

You can even find some bargains in markets that have held up relatively well compared with the rest of the nation. In Ashville, North Carolina,”the average sales price of a home there is only off by about 15% from the peak, but homes are sitting on the market for an average of 144 days, up from 94 days. The number of homes sold in 2009 is down by one-third from last year. And Austin,Texas has seen the average price of a single-family home decline by just 3% from a year ago,but volume has slipped 25%.”

Karim suggested,”the best stategy may be to find a desperate seller who is forced to compete with short-sales and fore-closures. Plus you’re likely to get the deal wrapped up in a much more timely fashion than if you’re dealing with the banks’ lawyers. You may find bargains on foreclosed properties and short-sales, but the process will take much longer.”

On commercial real estate, Dave Fessler, recently published some alarming statistics. “During the first quarter, businesses vacated 8.7 million square feet of retail space. Not only was that a 10-year high, it compares with 8.6 million square feet vacated for all of 2008. Vacancy rates at regional malls, strip malls, and neighborhood centers are increasing at the highest rate in 30 years.”

“While it’s not always easy to buy when everyone else is selling, history has proven time and again that it is precisely those who are able to buy in scary times are the ones who make the most money.”

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