I am frequently asked by friends and family who are either beginning or about to begin the home buying process if now is a good time. They point out that they currently have a decent savings account and that they are ready, but they keep hearing about how the market is “crashing” or “slowing” and they think it is “risky”. I think we all need to be reminding people about their investment choices. No, you’re not a financial adviser, but you can do little things to help build confidence in the housing market.
As an example, let’s assume I have a $20,000 savings account. How much will my savings be worth at the end of a year? If it’s a regular bank savings account, I might be receiving 3-4% APR on my savings, if I’m lucky. I might receive as much as $800 in interest over the course of that year. If I invest in the stock market and get an average 6.3% (S&P 500 YTD) and ask the same question, “How much will my savings be worth?”, the answer is an increase of just under $1,300. Not terrible, but not great. If I invest in a house in the Portland market with an average of roughly 11% appreciation, my “savings” will be worth $2,200 more than I started with. This is also before the various tax advantages I receive on the interest of my loan as opposed to taxes I have to pay on my savings account or stock sales.
Granted, this is not as liquid as stock or savings accounts, but for a longer-term investor, this is still an excellent investment vehicle.
I am the recipient of several lovely “Just Sold”, “Just Listed” and “Rose Festival” postcards, but no one has sent me one reminding me that real estate is still the most consistent investment option. This is the kind of information you should be sending out to people who have owned their homes at least 3 years (they are more likely to be interested in the possibility of another house or upgrading theirs) and to renters.
Go out and build consumer confidence in the housing market daily, it can only help your business in the long run.
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