Buy a house today? Proof that it’s the best time in history!

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I got an article from my broker regarding purchasing a property these days see on the daily wealth website. It was kind of incredible to compare the time we are are living these days with the past.

Right now, is the most effective time in history to purchase a house in America.

These days, I’ll show you why… based on a few cold, challenging facts.

First, mortgage rates are lower than they’ve ever been in American history…

Most investors have only seen a couple decades of mortgages rates on a chart. But my buddies at Global Financial Data have databases – which includes real estate data – that literally go back centuries.

I had dinner with the Global Financial Data team over the weekend. And they told me about their “Winans International” real estate indexes, with housing costs back to the 1800s and mortgage rates going back over a century. I had to share it with you…

Take a look at this chart of mortgage interest rates since 1900:

historically low mortgage rates

In U.S. history, you can see that the current mortgage rates are the lowest.
The last time that the mortgage rates were so low was just after World War II.
And what happened, just after World War II, when mortgage rates were this low?
The greatest postwar boom in housing prices – by far.

Adjusted Home Prices

Take a look. Mortgage rates bottomed in the mid-1950s, and house prices bottomed about the same time. Then the greatest boom in home prices in our lifetimes started.

Today we have record-low mortgage rates. And we have another thing in our favor…

Homes are more affordable than ever.

Based on the 40-year history of the Housing Affordability Index… houses are more affordable than they’ve ever been. Take a look…

housing affordability

“Affordability” takes three factors into account: home prices, your income, and mortgage rates.

Home prices have crashed. And mortgage rates are at record lows. But incomes (nationwide) haven’t fallen nearly as much… So homes are now more affordable than ever.

“Most people” out there will only tell you the bad news about housing… That’s the way it goes in a bear market. People drive looking in the rearview mirror.

Meanwhile, we have some darn compelling facts out there…

Home prices have fallen by a third… and mortgage rates are the lowest in history. Therefore, U.S. homes are more affordable than they’ve ever been.

You can listen to “most people.” Or you can choose to ignore them and stick to these facts.

Based on these facts alone, now may be one of the best times in American history – even the very best time – to buy a house.

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Comments (2) Jan 30 2011

Small home size is the new real estate trends

Posted: under Real Estate.
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It’s all over the news that the next generation of buyers would rather go with a smaller size home and use every inch of it instead of a big one with unused space.
The U.S. Census Bureau finds that the median size of a new single-family home nationwide continued to get smaller last year and that the downward trends is likely to last significantly beyond the end of the recession.
It was 2,268 square feet in 2006 and dropped to an even 2,100 last year.
And honestly, when I talk with buyers these day, I have a similar answer about this. It seems that the living room as we know it, meaning the room closed by the entrance and used to entertain people that we know less than family members without to get them in the core of our home has a tendance to be more and more useless. I guess it will disappear soon or later and we’ll entertain folks in the family room instead. The second point from buyers is the dining room. This one is still used but it seems that the use is only when an event occurs or when more people than the family is having a reunion. But most of the time now, the family eat more in the kitchen or in the breakfast area. I don’t see the dining room disappearing though.
However, those square feet have a better use in the younger buyers now. An office with all connection seems to be a better use than a living room. Overall, smaller square footage with a smaller price tag is what we are going to see in the future.
Looking at the specific amenities, there is a steady decline in the number of homes that were started since 2005 with three-car garages, fireplace, patios and deck. On the other hand, porches and heat pumps were on the rise. Home are getting more and more “green” as well.

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Comments (0) Jan 20 2011

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