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11
Recent Stock Market Volatility Highlights the Safety and Effectiveness of Investing in Local Real Estate
Given the volatility of the stock market so far in 2016, investors would be smart to put their money in local real estate. Interest rates are still very attractive, inventories are good and the rental market is very strong. Our home prices are still affordable, and real estate continues to appreciate slowly but steadily in our markets (see below). REO's (foreclosure properties) are especially good values and can be seen at RuhlHomes.com/Foreclosures.
Information courtesy of Federal Housing Finance Agency (FHFA) for third quarter 2015. FHFA stats always run one quarter behind. Their full report is accessible at www.fhfa.gov. *Rankings based on annual percentage change in house prices.
One of the investment strategies Ruhl&Ruhl encourages our clients to consider is to buy a home for each of their children or grandchildren as a gift when they are born. We suggest renting it out and consider fixing it up with the child's involvement for the next 18 years. When they are ready for college, they have a built-in college fund – either from the rental stream, home sale proceeds or refinancing proceeds on the home. Plus, when they graduate and relocate back home – they already own their first home. For those who are warry of dealing with tenants, home maintenance and repairs, they can partner with Ruhl&Ruhl Realtors' Property Management Department or your agent can suggest other management options. Nationally, the total volume of residential sales in 2015 was the highest since 2006. 2016 will continue the upward trend, though not as strongly as it was in 2015. According to Lawrence Yun, Chief Economist for the National Association of REALTORS®, "existing-home sales are forecasted to expand in 2016 at a more moderate pace as pent-up buyer demand combats affordability pressures and meager economic growth." "This year the housing market may only squeak out 1% to 3% growth in sales because of slower economic expansion and rising mortgage rates." Clear Capital Home Data Index projects home price appreciation in the range of 1-3% by January 2017. According to Clear Capital, homes in the low tier (selling below $116,000 nationwide) are forecasted to appreciate more than the higher tiers during 2016. By definition, the low tier is affordable to the widest range of potential homeowners and investors. This larger class of buyers will likely cause continued higher appreciation for the most affordable home tier. The Midwest is projected to be the fastest growing region in the country, with 2.5% annual appreciation in 2016. As always, this will vary by price range and neighborhood.
