By Brian Summerfield, Online Editor, REALTOR® Magazine
Recent news stories have pointed out that increases in the value of commodities such as oil and food may lead to alarming levels of price inflation. At the same time, the cost of renting has gone up, and is expected to surge even more this year.
As rising prices gobble up more of the American consumer’s budget, buying a home will be a more attractive proposition. Values have fallen precipitously these past few years, which initially — and, some would say, justifiably — damaged the perception of homes as an investment. But now, affordability is looking as good as it has in decades, especially in relation to renting. In fact, in many metro areas, it’s now considerably cheaper to own than rent.
Combine these pricing trends with moderate improvements in employment, and we’ve got a recipe for a housing turnaround over the next couple of years, with a few caveats: Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
You often hear talk within real estate about the shadow inventory that looms over markets. These are the homes that are at risk of going into default or are already owned by the banks and that can come onto the market at any time. They pose a problem because a flood of these properties can put enormous downward pressure on prices as inventories rise far above what can be absorbed by demand. Of course, the properties tend to sell for quite a bit less than other properties, and that’s good for buyers, particularly investors who can scoop up properties in bulk. But the discount inventory isn’t friendly to sellers whose properties have to compete with them.
All this notwithstanding, there really isn’t a hard and fast rule of what properties actually comprise the shadow inventory. This lack of definition is important, because one analyst who reports a big, scary number in the news might be thinking something very different than another analyst who uses very different assumptions. So, whether 7 million properties are looming over markets or something closer to 2.5 million is an important distinction.