Is it a good idea to invest in real estate? Buy a cottage in Ontario? Or is it better to sit back and wait for the “economy” to correct itself? Well, for those of you lucky enough not to endue lectures about Adam Smith’s “Invisible Hand”, I will give you my two cents on the topic.
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Homeowners and real estate investors can finally be optimistic as changes are occurring in the housing market. The S&P/Case-Shiller home-price index that declined for the fifth time to 1% in December makes buyers or investors positive to purchasing or investing in real estate. People can buy homes in the current real estate situation, as the payment for a house is equal to 19 months income for an average family. Michael Larson states, “Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own.” The fact that housing prices are equivalent to a 2 years income instead of 4 years and cost cut down by 5% makes real estate affordable and attractive. At this point, one will be better off buying a home, rather than renting but it’s all about the timing. Investors buying houses and paying in cash indicates the market is nearing a bottom. One doesn’t necessarily need to buy a house to gain from the real-estate rebound. Financial investments like stocks, mutual funds are great options to benefit from the rebound.