The Local Housing Market…Are We Almost There?
The unique thing to keep in mind is that the trip ends for each of us at different times.
For the first-time home buyer, you have arrived! You can purchase a house locally for 1997 prices, 50 percent less than just four years ago. Your mortgage interest rate will be around 5 percent, which is monthly 40 percent less than it was in 1997 (8 to 9 percent), and the federal government will pay you up to $8,000 to make that purchase. Make no mistake—it will not get any better!
Financially able investors have also arrived, with once in a lifetime opportunities to purchase foreclosure and short sale houses at incredibly low prices which could lead to a substantial portfolio and wealth as housing values return.
Even everyday move-up buyers who may be disappointed with their current home values have the benefit of substantial savings on the home they will purchase. And the federal government is now offering most of them $6,500 to purchase a home before June 30, 2010.
We certainly still have bumps in the road. Foreclosures are still coming on the market, housing values are continuing to decline (although at half the pace of 12 months earlier), and unemployment is a critical factor.
The one and only question that I believe everyone really is asking would be, “What is happening to my housing market?” The reality is that every community and everyone’s situation/needs are different.
Consider the following: In general, our community is in a better position for the housing market to revive than almost any other community in Michigan. We are in the process of making a rapid and remarkable transformation away from a highly auto and manufacturing workforce, and decentralized local governments.
We now see regionalized growth that is oriented to service, technology and education. Much of this is due to the leadership of LEAP, Prima Civitas, the Lansing Regional Chamber of Commerce, City of Lansing, and the commitment by Michigan State University to community and technical job growth. Add to this the successes of our many locally based insurance companies, as well as the Web, Internet and technology companies that are successfully appearing all around us. There are cranes in the air and local governments are beginning to work to support and attract new jobs and new businesses. Even our auto and manufacturing, although reduced from the past, are stronger and more secure than anywhere else in the Midwest. Much of our jobs transformation requires higher education and offers higher pay. This all benefits our local housing market. The result is:
- The housing market is local and personal to each of us.
- The Lansing area is solid and should be a leader in the Midwest housing recovery.
- The overall housing market in the United States is probably at or near the bottom, and should see an upturn this spring.
- When the national housing market turns up, so will mortgage interest rates.
Keep in mind, real estate has always been a long term investment. It is not something to buy today if you are speculating, may need to sell at a set time, or in the near future. But there is no investment for the long term that offers comparable benefits of a significant write-off, financial rate of return, personal and family joy and fulfillment, and the ability to own that investment free and clear in your retirement.
For many of us, the trip is over and it is time to take advantage of the long term benefits of buying and owning real estate now.
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Bill MacLeod is president and partner in Coldwell Banker Hubbell BriarWood, based out of East Lansing. He is also past president of the Greater Lansing Association of Realtors and has won many awards for excellence.