SAN DIEGO – April 25, 2011 – Residential prices have had double-digit declines in many markets in recent years, making homeownership more affordable. However, many people remain hesitant to buy. Only 64 percent of Americans surveyed deemed homeownership a safe investment in the fourth quarter of 2010, down from 70 percent in the first quarter of that year and from 83 percent in 2003.
“The magnitude of the housing crash caused permanent changes in the way some people view homeownership,” says San Diego University finance professor Michael Lea. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”
However, real estate remains relatively safe when compared to other investments. Even when the median home price tumbled 15 percent in 2008, the Standard & Poor’s 500 Index performed worse, declining 38 percent. Moreover, the National Association of Realtors notes that homeowners had a 4.8 percent jump in value if they bought in 2002 and sold their home last year – a slightly higher return on investment than the 4.2 percent average annual increase recorded over the last two decades.
The Mortgage Bankers Association expects a rebound in the job market to bolster homebuyer confidence, and experts point out that people who qualify for a mortgage would be wise to make a move now.
“There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates,” says First Trust Portfolios LP senior economist Robert Stein.
Source: Bloomberg (04/19/11) Howley, Kathleen M.
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
“The magnitude of the housing crash caused permanent changes in the way some people view homeownership,” says San Diego University finance professor Michael Lea. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”
However, real estate remains relatively safe when compared to other investments. Even when the median home price tumbled 15 percent in 2008, the Standard & Poor’s 500 Index performed worse, declining 38 percent. Moreover, the National Association of Realtors notes that homeowners had a 4.8 percent jump in value if they bought in 2002 and sold their home last year – a slightly higher return on investment than the 4.2 percent average annual increase recorded over the last two decades.
The Mortgage Bankers Association expects a rebound in the job market to bolster homebuyer confidence, and experts point out that people who qualify for a mortgage would be wise to make a move now.
“There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates,” says First Trust Portfolios LP senior economist Robert Stein.
Source: Bloomberg (04/19/11) Howley, Kathleen M.
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
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