This was the headline of the Orange County Register recently. The entire real estate section was focusedÂ on all the housing developments that are picking up steam by most So Cal builders. The California divisionÂ president of Fieldstone communities delivered the following quote, â€œIt makes sense (to build) again. WeÂ can deliver a product where thereâ€™s demand.â€ This column has been emphasizing for a few months, that theÂ lapse in building over this fairly prolonged period of time, will result in heavy pressure on the resale market.Â Thatâ€™s good for homeowners who have hung in there, despite the odds, and have stayed current on paymentsÂ and are riding out this temporary loss of equity.
Why do I say temporary? Letâ€™s look at investments for theÂ last ten years. There is not enough space here to do a comparison chart, but do your own. Take a look at theÂ S & P 500, the Dow Jones, Nasdaq, and Real Estate. Letâ€™s see which one, held from 2000 to 2010 (the worst Â decade, all agree, in real estate) and see which investment fared best. The short cut answer: real estate. Also,Â with that investment, you managed to leverage your money and buy something somewhere between 10 Xâ€™sÂ and 5 Xâ€™s your investment, depending on your down payment. You more than likely fixed your housing cost,Â unlike renting, and if you didnâ€™t use your home like an ATM, you have built equity. Letâ€™s not forget one of theÂ best tax breaks for the middle class, interest deduction.
Buying real estate doesnâ€™t sound so bad... No wonderÂ theyâ€™re building again. All agree building has been in the tank. This column has reported how low permitsÂ and percentages have been off. So after nearly 2 years of a blank in the building department, 28 developmentsÂ have started the building process in one way or another. According to Irvine-based housing consultantÂ John Burns, â€œbuilders are coming out of hibernation.â€ The projects together include approximately 3,000Â homes and townhouses and duplexes. Compare that to the paltry 1,600 of 2008-09. But catch up doesnâ€™tÂ happen overnight.
Short sales and foreclosures will continue to be a part of the market mix for several yearsÂ
to come, and certain buyers will be drawn to them for either â€œpatience equityâ€ or investors looking to rehabÂ and sell. Equity, or standard sales, will continue to ruleÂ the qualified buyer who can afford to pay market rateÂ for a turnkey property.