Buying real estate is a good long-term investment for many reasons, some of which have only become apparent in recent weeks.
Making sense of the story
- Housing prices rose sharply in May compared with April. The S&P/Case-Shiller Index, a closely watched real estate index, rose 2.2 percent in 20 of the nation’s big cities. Prices rose more than 3 percent in Chicago, Atlanta, San Francisco, and Minneapolis.
- Nationally, the increase was the first in seven months. More importantly, the increase matched other data and evidence this spring that foreclosures slowed and inventories were shrinking. Economics suggests that as the supply of distressed property slows, buyers will be forced into higher-price properties.
- In addition, interest rates on 30-year fixed mortgage have tumbled below 3.5 percent. For those who can get credit, these aren’t just historically low rates; they are one-sided deals tilted toward borrowers.
- Housing starts also rose in June, and for those who can afford to invest in property, rents continue to rise. Prices are at a 10-year high. Real estate website Trulia found that it is cheaper to buy than rent in each of the nation’s 100 biggest metropolitan areas.
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