Real estate as both an investment and a personal asset continues to be very attractive. However, some of the economic data flowing in from Washington indicate this window is closing.
For example, renters nationwide are paying a higher percentage of their net after tax income than at any other time since the government started keeping records: a huge 30%. This can only be explained by one phrase; a huge housing shortage. It’s also a well known statistic that construction lending and building permits (both pulled and completed) were at historic lows in the Great Recession. And I don’t even have to mention that interest rates have remained at historic lows, although they are on the move from their all-time lows last year.
When you combine that with declining unemployment, a strong manufacturing index, rising positive attitudes on personal incomes, and that rents have risen higher in the past 12 months in California than anywhere else in the country (13% in the Bay Area), then you have the perfect mix of data to buy your home or make an investment. I have personally bought three income properties in the past three years because I am so convinced that timing is the issue here. I believe within three years we will all be wondering why we didn’t do more to take advantage of this window of opportunity and make a bigger strategy move on our investments.
Lynn and Mark