Charlie Fuller (real estate coach, speaking on Dean Graziosi’s channel) argues in late-2009 that U.S. housing appears to have bottomed and is showing early signs of recovery. He cites S&P/Case-Shiller index gains (quarter-over-quarter), a 7.2% month-over-month rise in existing-home sales in July, higher inventory (4.09M units), mortgage rates near 5%, and national prices about 30% below the 2006 peak; he frames the moment as an opportunity for buyers while stressing that markets are local and advising clear exit plans.
Questions this video answers
The S&P/Case-Shiller U.S. National Home Price Index (20-city index) showed a quarter-over-quarter increase.
Detroit and Las Vegas.
Existing-home sales were up 7.2% in July from June.
4.09 million units (inventory of unsold homes in July).
Inventory was up 7.3% from June to July.
Chapters
Hello and welcome. This is Charlie Fuller, real estate coach and investor with the Dean Groff COC Real Estate Academy. Today's podcast we're going to be talking about the fact that the housing market has rarely looked better. Now this article originally was aired in the Wall Street Journal starts off by saying last week Standard and Poor's reported that the S and P Case Shiller US National Home Price Index of of real estate values increased this past quarter over the first quarter of 2009, the first quarter on quarter increase in three years it's index of 20 major cities. I want to underline that this is an index of major cities and it happens to be 20 major cities. Also rows for the three months ended June 30 over the three months ending May 31, with only hard hit Detroit and Las Vegas experiencing declines. The week before that, the national association of Realtors reported that sales volume of existing homes, not new but existing, was up 7.2% in July from June. So in short, the data suggests that real estate prices hit a bottom sometime during the second quarter and now have begun to rise. There is no way to be certain that this marks the end of the long, painful correction that followed the real estate bubble, but it clear points out that prices are no longer in a free fall. That means if you've been sitting on the fence, it's a perfect time to act. I can understand why buyers have been cautious. Obviously few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real estate prices nationally now down to about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Let me say this, every real estate market is local. In other words, again, what's happening in somebody else's state is not necessarily going to happen with you. So there may be a few exceptions, but overall it's probably not a better time. There probably is not a better time to get involved in real estate than right now. If you're planning to now, let me just say that brings up if you're planning to I have lived through three of these down markets and the fact of the matter is it is a perfect opportunity to take advantage of a commodity which happens to be real estate. I hear a lot of people say I don't have any funding, I don't have any money, but there's a lot of ways to go about tying up real estate, whether it's through lease option or doing something in regards to going into a deal with a partner. In addition to bargain prices, buyers also should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the national association of Realtors. Mortgage rates this week were at a two month low of close to 5%, according to Zillow. Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. With stricter standards. Lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down. Also, the days of buyers lining up and flipping Miami beach and Las Vegas condos are gone. Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co developed the Case Shiller Index. Let me just say this, right now is a perfect time to be a very good negotiator and to get discounts of 20, 25, 30%. Even though real estate year over year, when we talk about a 3% return, that's because of appreciation that even take into consideration the fact that you can buy them at a big discount. Also, I'll reiterate this we talked about nationally, real estate is down about 30% for their 2006 peak. So again, we're buying low just like it says. Also, there's a good reason for home ownership and it's been a central part of the American dream. It delivers security, pride of ownership and a sense of community and decent investment returns. As a bonus in this market, for every hardship story, and definitely there are a number of those, there are others realizing their dream of home ownership and getting what may turn out to be the best deal of their life. Again, we have a situation where we have an opportunity. It's like somebody hands somebody some lemons and they make lemonade. You can either make lemonade or you can make some sort of sour mash with it. I don't know. But the point is it really is an optimal time. I always say whenever you get involved in real estate, make sure that you have your exit plan in place so you know what the next step is. Until next time, this is Charlie.
