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Is This a Good Time To Buy Real Estate?

By: Huntsville Real Estate Expert Mike Manosky On May 16, 2014

Is this a good time to buy real estate? In a word “yes” it is. But, home buyers need to be realistic about expectations. Jack Hough, financial writer with SmartMoney.com, recently posed the following question: “When will US house prices recover?” His own answer: “Likely never. But that’s no reason not to buy.”

good time to buyHere’s why that answer makes sense…

Baby boomers (born after WWII) were taught by their parents that buying a house is the best investment anyone can make. Buy a house, work for a corporate employer, pay off the house, collect a pension and a little social security, and your retirement is set! There were a lot of BB’s parents for whom that formula worked. But, it hasn’t worked out for very many boomers!

Lack of pensions and “guaranteed” social security aside, home buyers have learned that a house is not really an investment. It never has been. Over the long haul “appreciation” of a house in the US has proven to closely track the rate of inflation. That means that a house is an okay hedge against inflation, but there is very little “gain” in real value. It simply keeps pace with inflation.

That phenomenon is perfectly logical and is not necessarily a bad thing. A house is a commodity that gets used just like all its components of wood, metals, shingles, and appliances are commodities. Commodities are consumed or used and therefore they depreciate. Inflation is the natural increase in the cost of all things. It is usually offset by increases in income.

Inflation and income usually maintain a balance. Within that balance inflation is not really noticed much because it is offset by increases in income. The cost of commodities, including housing, is always inflating. Therefore, over a period of years it seems as though a house appreciates in value. What really happens is that inflation pushes prices up just like with all other commodities.

In the last decade we experienced a boom and bust cycle. Housing costs were artificially inflated due to outside financial pressures. Since the housing bubble burst prices are pretty much back to where they would have been without the artificial boom.

That is a good reason for buying real estate in Huntsville AL. We are past the boom/bust and back to reasonable prices that align with actual value. If you’re inclined to join with other home buyers because you enjoy doing the required maintenance of homeownership, then consider buying Huntsville AL real estate now. Just be careful to research, shop carefully, buy good value, and understand what that house is for…it is not for an investment.

Information provided by Huntsville AL Real Estate Broker, Mike Manosky.

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