For years, investors have been buying real estate to make money and build wealth. Today however, the media would have you believe that the real estate bubble has burst and that you can no longer make money buying real estate. Newspapers and television reports love attention-grabbing headlines. But, are headlines based on facts or designed to get you to tune in?
Take a look at how the headlines could read.
Housing Prices Plummet or Housing Prices Decline Slightly
In 2006, median home price across the country dropped only 1.7 percent. That figure certainly doesn’t indicate a bust in the real estate market. The way property values increased over the past decade, that decline is more of a bump in the road than a major disaster. Because most investors buy low and sell high, a 1.7 percent drop in prices wouldn’t mean that investors can’t make money buying houses.
America’s Housing Market Crashes or America Still Needs Housing
According to media reports, the turn to a buyer’s market indicates that too many houses languish on the market. However, the number of new households being formed and an increasing population keeps pressure on the real estate market. America’s expanding colleges and universities continue to turn out qualified graduates who need housing.
Mortgage Interest Rates Escalate or Interest Rates Still a Bargain
Even though headlines say interest rates are going up, long-term mortgage rates are only about a percentage point above historic lows. Many investors remember paying 12 percent or more interest and believe today’s rates to be a real bargain.
Unemployment Rises or Employment Stable
Some news stories highlighted areas where people were losing their jobs. However, national unemployment rates are lower than any time in the past five years. The country’s unemployment rate indicates that Americans are better positioned to make their house payments and will continue to qualify for new mortgages.
Economy Worries or Consumer Shopping Trends
Headlines shouting that the American economy is destroying itself are countered by consumer economic votes. Every dollar spent counts. Consumers cast their votes and spent an unprecedented amount of money on Halloween decorations, candy, and costumes. Consumers without disposable income wouldn’t buy candy instead of healthy food for their children. Home improvement spending is also at an all time high. Consumer shopping bolsters America’s economy.
What do these headlines mean to investors? Educated investors can still make money buying real estate.