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REALTOR®: Real Estate Is a Solid Long-Term Investment

Monday, October 15, 2007

The media is all abuzz these days with information about what is happening in the real estate market. If you solely rely on the media to tell you whether now is a good time to buy or sell, you may be missing some great opportunities. To get the proper perspective on the value of real estate, you have to go right to the source, and that means talking to a REALTOR? in your local market.

According to 2007 National Association of REALTORS® (NAR) President Pat V. Combs, “Perceptions about real estate have been skewed in recent months due to the overwhelming focus on national figures. While average sales and prices help us identify trends, the fact is all real estate is local – conditions vary greatly from one city to the next. Unfortunately, that news is largely unreported.”

Here are the facts on three popular misperceptions in the real estate market:

Misperception: No one is buying a home, and home prices are falling rapidly.

Fact: According to the National Association of REALTORS?, home sales are expected to reach about 5.5 million this year – about the same level of home sales we saw in 2002, which was a record at the time.

Fact: While it’s true that home prices are down slightly from last year, the median home price has increased more than $50,000 since 2002. And, two-thirds of metro areas showed price gains last quarter, and San Mateo County is one of them. The California Association of REALTORS® (C.A.R.) shows despite some reduction in home sales, the median price for all homes in San Mateo County in August increased 5.8 percent in August, from $755,000 in August 2006 to $799,000 in August 2007.

Misperception: Foreclosures and delinquencies are rising rapidly in every state.

Fact: According to the Mortgage Bankers Association, four states – California, Nevada, Florida and Arizona – are responsible for most of the increase in foreclosures. A total of 34 states saw a decrease in rates of new foreclosures in the second quarter. Also, many lenders have pulled back from the market across the board, forcing buyers to sit on the sidelines.

RealtyTrac, another real estate information service out of Irvine, Calif. recently reported home foreclosure filings fell 8 percent in September from a 32-month peak in August. A total of 223,538 foreclosure filings were reported in September, down from August's 243,947. California's foreclosure rate was one filing for every 253 households. The state reported 51,259, down 11 percent from August.

Misperception: Stocks are a better investment than real estate.

Fact: Houses are not like stocks. Homeownership is designed to build wealth over the long term. Studies show that homeowners have an average net worth of $184,000, compared to just $4,000 for renters.

San Mateo County Association of REALTORS® (SAMCAR) President Geoffrey Craighead has noted San Mateo County’s housing market has experienced years of “spectacular home price appreciation. “Over the long-term, real estate in San Mateo County continues to be a great investment, averaging 11 percent annually since the 1960s,” Craighead has observed.

Fact: Owning a home also helps strengthen our families and our communities. You can’t put a price on that.

“When you consider the facts, it’s easy to see why 5.5 million people are choosing to buy a home this year. There are some challenges in the market, but overall there are many more opportunities in local markets today,” said Craighead. “Real estate continues to be a solid long-term investment.”

Members of SAMCAR are working in several ways to help consumers understand conditions in their local market and take advantage of the opportunities to invest in real estate, said Craighead. “We provide consumers with the latest information on home sales and prices and what factors are likely to drive the market in the months and years ahead; we can help educate prospective homebuyers about the various loan products available to them; and we are working with lawmakers to provide more affordable financing options that will enable homebuyers and homeowners to keep their homes for the long term.”

For more information on the opportunities in San Mateo County and how you can build wealth through homeownership, contact a REALTOR?in your community, or visit www.samcar.org.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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