A well-known cliché states that: “It’s always darkest before the dawn.”  With a “Perfect Storm” of opportunities leading to a possible “Great Real Estate Recovery,” it may be wise to purchase more real estate and even consider helping family members exploit the outstanding opportunities in real estate. Consider the following three key points that are part of the Perfect Storm for Real Estate.

 

1. Mortgage Interest Rates –  At 3.5%-4% nationally, the ability to finance real estate purchases and enjoy low carrying costs, while rental rates continue to increase, is better than ever.
2. Real Estate Price Over-correction – Prices have over-corrected in most markets, and are actually much lower than they should be. This situation is likely to lead to higher appreciation once economic conditions improve.
3. Real Estate Market Conditions – The market is beginning to improve with sales activity during the first half of 2012 up from the same period last year and prices stabilizing despite higher-than-normal inventory levels.

 

All three of the above factors are coming together to create unprecedented opportunities for real estate investors. Everyone should be considering purchasing additional real estate now, at the beginning of The Great Real Estate Recovery. Additionally, the risk of both prices and interest rates increasing over the next several years should prompt parents with children and financial planners alike, to recommend elders support the purchasing efforts of the younger generation. Parents should consider that:

1. Prices are likely to increase more than the historical average of 5% per year, giving parents an opportunity to assist their children achieve financial security now that will last long after the older generation is gone.
2. Once interest rates start increasing, the opportunity to save tens of thousands or even hundreds of thousands of dollars in mortgage interest payments will be gone. Keep in mind, the average mortgage interest over the past 40 years has been approximately 7.5%-8%.

 

How can it make sense for parents and financially secure individuals to “not” consider increasing real estate portfolios for themselves and their children. Remember “timing is everything” and the timing is NOW!