It IS Time to Buy That House…
Tim McLaughlin
…was the headline of a great article that ran in the Wall Street Journal’s weekend section last week. For those of you who didn’t get a chance to see it, here is a synopsis.
– The nation’s ratio of house prices to yearly rents is nearly restored to its pre-bubble average, U.S. house prices have plunged by nearly a third since 2006, making it a terrific value proposition.
– Taking historically low mortgage rates into consideration, houses are the most affordable they have been in several decades.
– “Price to Rent” ratios are among the lowest since the 1960’s, with the combination of housing prices coming down and rents maintaining their price levels of 5 years ago (even increasing to some degree in some cases):
o The Philadelphia region tri-state price to rent ratio is reported at 11.6
o Washington/Southern MD/Northern VA is at 13.3
o The New York Metro Area is at 17.6
o All three of these regions are down significantly from where they were in 2005 to 2008
o Nationwide, the average is 11.3, down significantly from the peak of 18.5 according to Moody’s
– The numbers are quickly turning in the buyers favor: stock-oriented individuals can think of a house’s price/rent ratio in line to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.
So how does the value conscience consumer capitalize on this? Your first step is to meet with your knowledgeable Weichert Realtor and your trusted Weichert Financial Gold Services Manager to strategize a plan and set your course of action. With the buy vs. rent equation never being more in your favor, coupled with near historically low interest rates, the time to capitalize is now. Ask us how…we can help!
