Some observations as we begin the 4th quarter might surprise you. Keep in mind that Group O’Dell has just been named by Inman as being in the top 250 Real Estate teams in the US. That fact is surprising as it indicates that we are considered one of the national leaders in our business. Our activity and actual sales in the last year are bearing this out. That being said, I feel qualified to share with you what we are seeing locally and nationally in the housing business and how our observations may help position you in the future.
We are still in a recession. Although optimism is improving and sales are climbing, there are still home owners feeling the brunt of our economic woes. Many families cannot sell simply because they do not have the equity or financial reserves to move. They do not qualify for a hardship therefore selling their home through a bank endorsed short sale is not an option.
Cost of funds: The vehicle that allows 70 percent of real estate transactions, mortgage financing, is as attractive as any time in our history. Mortgage rates are artificially low due to the sluggish economy. Any potential home owner with decent credit and some reserve funds (savings) is positioned to make a long term housing purchase. Rates below 3.5 percent on 30 year money are now common. All of our senior clients who have been around for generations have NEVER seen money available in their lifetime at these low low rates.
Investing is becoming the norm:
Investors are finding a growing and built-in rental market for the following reasons:
- A growing number of people who lost their homes to foreclosure in recent years are getting back on their feet and looking for homes to rent.
- Immigrants and international ex-patriots are coming to the area for short employment assignments.
- The first time homebuyers of 2000-2006 who had marginal credit and no savings continue to need homes to rent.
- Lack of confidence in the overall economy still has some potential buyers on the fence.
There is a looming housing shortage coming soon which is not being reported in the media. There is a significant pent up demand for new housing that has been depressed during the recession. Because of the aging inventory of current housing and the fact that builders have not built many homes over the last five years, demand for housing is going to increase soon and inventory will NOT be available. We are starting to see this situation even in Kansas City as there are some shortages in certain parts of town. When demand increases and inventory is tight, interest rates and home prices will increase.
Bottom line: Those of you who have been waiting for the perfect storm to buy or sell, your time has come. All indications are for interest rates to rise soon when the economy starts showing consistent improvement. It is also time to act before inventory becomes so tight that home prices start to rise. If you are wanting to upgrade or downsize and have a decent home to sell where you have some equity to play with, you are positioned to set yourself up for life.
Group O’Dell would be happy to elaborate on any of these items and we always recommend seeking wise real estate council before investing. You can contact me at 913.599.6363 or firstname.lastname@example.org.