Real Estate Is a Solid Long-Term Investment
The news media is all abuzz these days with information about the real estate market. But if you rely on national news stories to tell you whether now is a good time to buy or sell, you may be missing a great opportunity. To get the proper perspective on the value of real estate, you have to go right to the source and that means talking to a REALTOR® in your local market.
“Perceptions about real estate have been skewed in recent months due to the overwhelming focus on national figures, said [Association/Board President Name], president of the [Association/Board Name]. “While average sales and prices help us identify trends, the fact is all real estate is local – conditions vary greatly from one city to the next. Unfortunately, that news is largely unreported.”
Here are the facts on three popular misperceptions in the real estate market:
Misperception: No one is buying a home, and home prices are falling rapidly.
Fact: According to the Illinois Association of REALTORS®, home sales are expected to reach about the same level that we saw in 2000, which was still a great year for real estate. Nationally, this year is projected to be the fifth best year on record for home sales. That means an approximate 5.5 million homes will be sold in this year alone.
Fact: While it’s true that the growth rate for Illinois median home prices is down slightly from last year, the median home price in Illinois has increased more than $40,000 since 2002. And, the Chicago metro area showed over a four percent price gain in the third quarter of 2007 compared to third quarter 2006. Again, each market varies. A significant share of metro areas in the state saw gains in the median price in the third quarter of 2007.
Misperception: Foreclosures and delinquencies are rising rapidly in every state.
Fact: According to RealtyTrac, Inc., three states – California, Florida and Nevada – are responsible for most of the increase in foreclosures in the third quarter. Illinois actually saw a 4.2 percent decrease in foreclosure filings in the third quarter compared to the second quarter of this year.
Fact: The reasons for foreclosures vary from state to state. If you are in trouble, call 1-888-995-HOPE to speak to a counselor on how to avoid foreclosure.
Misperception: Stocks are a better investment than real estate.
Fact: Houses are not like stocks. Homeownership is designed to build wealth over the long term. On average, the value of a home nearly doubles every 10 years.
Fact: During the past three decades, home values increased an average of 6.6 percent per year. According to the Federal Reserve Survey of Consumer Finances, the average homeowner has 36 times the wealth of the average renter. Homeownership is key to climbing the economic ladder.
Fact: Owning a home also helps strengthen our families and our communities. You can’t put a price on that.
When you consider the facts, it’s easy to see why many people are choosing to buy a home this year. There are some challenges in the market, but there are many more opportunities in local markets throughout Illinois today. Real estate continues to be a solid long-term investment.
Illinois REALTORS are working in several ways to help you understand conditions in your local market and take advantage of the opportunities to invest in real estate:
REALTORS provide consumers with the latest information on home sales and prices and what factors are likely to drive the market in the months and years ahead;
REALTORS can help educate prospective homebuyers about the various loan products available to them; and
REALTORS are working with lawmakers to provide more affordable financing options that will enable homebuyers and homeowners to keep their homes for the long term.