Real estate has, for the last 50 years, been an investment. Before WWII, buying a house was comparable to buying a car – as soon as you move in, the price depreciates. As home values continue to decline, and the markets augur another recession, it is becoming increasingly clear that we will have little recourse to real estate as investment. While some regions have begun to rebound, other areas, like those in Arizona and Nevada, probably won’t see the light for years.
Housing sales in July hit their lowest level in a decade, down 25.3% from last year. Part of why is that July was the first month buyers couldn’t receive a tax credit of up to $8,000. Since this is a large factor, many economists reckon we shouldn’t panic. Yet prices are still in the tank, dropping .2% last month at the usual peak time, after about a year of average stability. Sellers will compete for buyers as the markets lose sales during the colder months.
Despite the lowest mortgage rate in years, home sales will continue to be slow. If the economy improves, however – haha! – then you can expect the housing market to also. So people will continue to buy homes when they need to, but the way of investing in a home is gone for now.