Do I have a hot news story for you? Not exactly. I wrote stop the presses because I would like to see the news media stop reporting on the real estate industry until (a) they get it right; (b) they quit calling everything "the subprime crisis" (c) their stories are put into context (d) and that once in a while they give the other side of the real estate story and not just the one that makes the sky seem lower than the ground!
Real Estate is here to stay and probably is the best buy we have seen in years for three reasons, which are all related: the weak dollar, the net population growth and the fact that the inflation genie is out of the bottle. All three will help stem the tide of the nay saying that is flowing from your local or national news person. And these facts aren't made up, or taken out of contact or sensationalized to sell "The News".
Do we have a weak dollar? You betcha! Is this good for us? That is a matter of constant debate. However, weak anything usually isn't good. Then how can it help real estate?
This is number one of the three reasons why real estate is very desirable at this time. Before I go any further I wish to remind the reader that everything I say must be tempered by the three main words in real estate: location, location and location.
The Euro is now over $1.50 versus the dollar and this gives all those who hold Euros a giant discount on dollar denominated assets: real estate being a major one. Therefore we are having a buying spree by foreigners from various locations taking advantage of our real estate. Note: In the western United States Canadians are buying in ever increasing numbers in desirable second home locations. The Loonie, Canada's currency is now over $1.02 versus the dollar which is up from around 62 cents less than a decade ago. Increased demand is directly coming from the buying power of foreigners because of the weakness of the dollar versus their currency.
Second point is the net increase in population from the increase of births over deaths and immigration (measurable legal immigration). We are growing about 1,100,000 family units a year that need housing and we are currently ramped down to about 700,000 new units a year. Obviously with unsold new homes flooding the markets in some areas and generally existing in all markets to some degree the need for these additional units won't kick in for a year or so, but the need is not going away and the building will start again. Builders are poised to start building at the first sign of a bottom and the start of the real estate turn around.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.
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