The Chairman’s Report Summer 2015

Two Questions

Wherever I go, it’s not unusual for people to ask me two questions:

1. Is this a good time to buy a house?
2. Will my house be a good long-term investment?

My answer to both is a resounding “Definitely …Yes!” If you are reading this Chairman’s Report, there’s a good chance you are considering a move and that you are looking for the best information available and the confidence to move ahead. So let’s take a closer look at those two important questions.

1. Is it a good time to buy a house?

Definitely! I don’t know if there’s ever been a better time! Our economy has been steadily improving for six years:

  • Consumer confidence is at its highest point since the recession began.
  • Job growth is up, and the economists expect employers to add 3 million jobs to the economy this year.
  • Wage growth is starting to accelerate. This is the breakthrough indicator that i mentioned in my previous Chairman’s Report that will propel our economy forward. With “quit rates” rising and unemployment dropping, employers are beginning to raise wages to retain good people.

We are also still experiencing historically low interest rates. To encourage the economy’s growth, the Federal Reserve Bank has kept interest rates artificially low. Rates have been so unbelievably low for such a long time that it’s hard to imagine anything else. But if rates do not begin to rise as the economy improves, it will cause inflation and perhaps even another housing bubble. That certainly won’t benefit the economy, or consumers like you and me, in the long run. With the economy doing so well, the Federal Reserve Bank has gone from discussing if rates should rise to when they will rise. Many economists believe this will begin in September. It is crystal clear that we have seen the low point for mortgage interest rates. The only direction for them to move is up.

Beyond these economic indicators, across the country home prices are beginning to rise or are poised to rise. The National Association of Realtors predicts that in 2016, home sales will rise to their highest level since 2006. All of the data suggests that 2015 is a pivotal year. That’s why it’s a great time to buy or sell a house.

If you are buying your first home, the higher the interest rate, the less house you will be able to buy. And if you wait, you will likely pay a higher sales price for a home than you would today. These are two good reasons not to delay.

If you are selling a home, there is a good chance you will also want to buy another that better meets your needs. If prices start rising, you may think it wise to wait before you sell. But consider this: even if the value of your present home does increase as you postpone a sale, you will pay a higher interest rate to purchase the new home you hope to have. This, together with the higher price you would pay for your new home a year from now, will offset any potential appreciation you might gain by waiting to sell. My best advice is, if you’re ready to move on, sell and buy now.

2. Will my house be a good long-term investment?

Yes! Over the long-term, homeownership is one of, if not the best, vehicles for wealth building we can make.

But homeownership is so much more than a sound financial move to make. A survey Berkshire Hathaway HomeServices released this spring revealed that homeowners view a home as more than a price tag. They are placing more value on the home’s intrinsic qualities such as whether or not the home meets their family’s current and future needs, the pride that comes with owning the home, and having a place in the community. The right home will always be more than an investment on paper. It will literally shelter you and nurture your dreams. The remaining months of 2015 offer a window of opportunity that is open wide. Contact your BHHS Fox & Roach sales associate and Trident loan consultant today!

Lawrence F. Flick, IV
Chairman and Chief Executive Officer
Berkshire Hathaway HomeServices
Fox & Roach, REALTORS ® and The Trident Group

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