The Housing Market is Not A Stock Market Ticker Tape

CEO Viewpoint

Today I was interviewed by the local press to see if I had an answer as to why a neighboring city's closed home sales decreased this month while OKCMAR's closed home sales went up.

I think it is very important that as professionals we educate the public that real estate is a LONG TERM investment. The average consumer should anticipate investing in his home for 10-30 years. Slight monthly fluctuations in the housing market are normal- just as grocery and consumer goods fluctuate in price. Since the inception of the stock market, real estate has out performed the stock market over time without fail.It is the BEST investment a person can make. This investment is more than financial it is in investment in our community and society as whole. Neighborhoods with strong home ownership rates tend to be low in crime, support their local schools and support the bonds of human friendship- something we all need.

NAR has great talking points to use when speaking of the value of home ownership- they can be linked to here...TALKING POINTS

NAR also offered the following when we analyze rate of return,"When considering the investment value of a home, think about this: Dollar for dollar, the rate of return on an individual’s cash downpayment on a house is substantial. Buyers typically use their own money to cover only a small portion of the purchase price, but the home appreciation they realize is based on the total value of the property.

Homeowners benefit from the power of leverage. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield $23,600. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5 percent would return nearly five times the average stock market return, at $110,300...."

Now, add to that rate of return the ability to deduct your mortgage interest and property tax from your federal tax return and calculate the savings in income tax paid over the life of a 30 year mortgage and the return is even greater. This year add another $8000 in one's pocket if one is a first time homebuyer and the yield on investment expands even more!

Just something to think about....