More than 8 million homes sold last year, a new record. But the surprising thing is the number of people buying second, third and even fourth homes for investment.
2004 was a bad year for stocks, but a banner year for real estate. While a record number of first-time buyers took the plunge, so did a record number of investors.
It may be cold outside, but as far as the real estate community is concerned, it’s already spring. And from the speed with which home buyers are writing those good faith deposit checks, you’d never know the industry is coming off a record year.
“It’s going to be another great year to buy or sell a home. Housing has proven to be such a good investment over the years and that will continue to be the case for the foreseeable future,” says Al Mansell, National Association of Realtors.
First-time buyers are out in force, jumping off the fence in order to take advantage of interest rates which are still at 6 percent or below for a 30-year fixed rate mortgage.
“I’m seeing that a lot of first-time buyers are buying a lot sooner than they used to. They’re not waiting necessarily to save up to 20 percent down,” says Janice Corley Blaney, Elite Residential Services.
Today, you can buy a home with nothing down at interest rates close to the historic low.
Most buyers are getting pre-approved before they even start seeing homes so they know what they can afford to spend. And, with properties still selling quickly, buyers want to know what’s available in their price range.
“I really kind of wanted to see the market now because I know there’s a lot more available in the spring. My lease doesn’t end until August, but if I need to, I can go ahead before that happens,” says Terri Connolly, first time buyer.
Like many buyers today, Terri isn’t just thinking about buying her first home, she’s also thinking about keeping it as an investment.
Last year, a third of all homes that were purchased in the U.S. were purchased by investors, who planned on keeping them for their investment portfolio. But in Chicago, the number could be even higher.
“It may be slightly higher because most of the buyers today, they’re not selling their places. They’re learning the business of leveraging what you own and renting it out and keeping it and holding onto it and building that financial statement,” Corley Blaney says.
Housing prices are expected to rise another 5 percent this year. So it’s easy to understand why some buyers may be withholding on their 401(k) contributions in order to invest more money in real estate.
“I believe that prices are still rising,” Corley Blaney says.
Which is good news for all home buyers.
While the National Association of Realtors expects another good year, they do predict sales will dip slightly in 2005. They expect the vacation home and investment property market to continue to be strong.
Janice Corley Blaney
Elite Residential Services
1618 N. Wells Street
Chicago, IL 60614
Elite Residential Services
Prudential Preferred Properties