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Fortune Magazine published a great article this week talking about how the real estate market is on its way back to recovery and wanted to share it.

Signs of Housing Recovery

We think it’s a compelling article that supports our belief that it is a great time to purchase a home due to low home prices and historic low mortgage interest rates.

While gold or stock options may be appealing, take another look at housing – it may just be the most attractive asset in the American portfolio today.  Here’s why:

• Home inventory is starting to decline
• Buying a home is affordable

Home Inventory is Starting to Decline

According to a three-decade tracking study done by Metrostudy, soon there will be a shortage of homes. Subsequently, there will also be a boost in home prices.  For decades, Metrostudy had inspectors literally drive through 45,000 subdivisions from Baltimore to Sacramento to record whether each lot contained a finished house, one that’s under construction or one that had been sold. They covered 65% of the U.S. housing market.

The two most important metrics Metrostudy used to determine whether there is a surplus or shortage are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell them. The results show that there is a reversal of the new-home explosion that caused the housing price decline a few years ago.

There are two factors that are helping the recovery in residential real estate:

1. Historic drop in new construction
2. Steep decline in prices

Buying a Home is Affordable

Supporting Metrostudy’s findings, a new study by Deutsche Bank also found that In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and home maintenance costs than to rent the same house. For example, in Miami, the average rent is now $1,031/month, vs. $856 it costs to have a ranch as an owner. Obviously, not every market is the same and in some states renting might still be less expensive.

Depending on where you live, the state of the real estate market may give you the best opportunity to purchase a home now, while homes are both accessible and affordable.

Check out the full article “Real estate: It’s time to buy again” and let us know what you think!

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