Given the tsunami of bad news about the U.S. housing and mortgage markets, it is only natural that potential homebuyers are a nervous lot. The short-term market statistics have heightened concerns that perhaps real estate is no longer a good investment. While the question of how long the current downturn will extend and at what level home prices will bottom out, the fact remains that current conditions will not prevail in the long term. When looking at buying real estate, it’s important to take the long view, like successful investors in the stock market.
While current weakness in the housing market requires that real estate buyers be more cautious about the property they are purchasing and how they will finance the purchase, long-term trends support the proposition that homeownership is still the best investment on can make. To argue that the current market conditions are going to prevail out into a bleak future, one would have to presume that the cost of land, labor and building materials are going to remain static or fall in coming years. Simply put, this is not going to happen. And these rising costs over time continue to make owning a home a great investment. There are many other underlying factors that also support confidence in the security of real estate investments, called by economists the ‘fundamentals’. One of these factors is the increase in demand for housing spurred by a surge in immigrants in many markets. There are many others.
For more on why those who are fence-sitting about buying a home because of all the bad news in the housing market, click here for an article that forcefully argues that the current downturn and price drops will be counterbalanced by the long term growth in the value of real estate.