Real Estate or Stocks
A segment of the population believes things are in such bad shape today that the only way to preserve economic value is to stockpile gold, tent pegs and sandwich makings. In this view, nothing else has value and it's entirely possible that values will fall further including both stock and real estate values. Given events in Iceland, Ireland, Greece and Portugal and looking at U.S. job erosion and the budget debate it's hard to dismiss those who believe our economy is contracting and with it much of our wealth, influence and social stability. Yet as dim and dark as things are for many Americans, there's also a case to be made that selected real estate remains an attractive investment option. For one, our population is growing. We now have more than 311 million people inside our border that’s about 10 million new people since 2007 and they all need housing. Want more? Mortgage rates are below 5 percent. Mortgage interest is deductible. Investment real estate is depreciable. Home prices are down. Home prices in major foreclosure centers including our area with its wonderful climate are way down. Foreclosure prices are down most of all distressed properties are selling with a 20 percent discount nationwide according to the National Association of Realtors.
Take a minute to look at our own market and see what’s trending in Real Estate in our surrounding counties. Starting with Leland in Brunswick County, the average price per square foot was $111, an increase of 1.8% compared to the same period last year. The median sales price for homes in Leland for Apr 11 to Jun 11 was $176,750 based on 14 home sales. Compared to the same period one year ago, the median home sales price increased 12.6%. The average listing price for homes for sale in Leland was $239,114 for the week ending Aug 17, which represents an increase of 1%, or $2,279, compared to the prior week. Next step into Hampstead in Pender County the average price per square foot was $120, an increase of 10.1% compared to the same period last year. The median sales price for homes for May 11 to Jul 11 was $217,600 based on 72 home sales. Compared to the same period one year ago, the median home sales price increased 8.8%. Lastly, let’s look at Jacksonville in Onslow County where the average price per square foot for was $93, a decrease of 6.1% compared to the same period last year. The median sales price for homes for May 11 to Jul 11 was $154,000 based on 235 home sales. Compared to the same period one year ago, the median home sales price increased 3.2%. What we note in the trend is increase something not reported in the gloom of the news but what real investors know, thus the activity.
What are the options? We have a massive internal market, an established infrastructure and much to do. We need to improve our roads and bridges, become energy independent and better educate our children, among many other needs. When we inevitably undertake such projects there will be a new round of job growth and economic development. What about alternatives? Yes, the stock market is alluring but can you really compete against the computer programs which make most of today's trades in microseconds? How about a low-risk certificate of deposit? A five-year CD will now yield about 2.15 percent. That's great, except that the inflation rate reached 3.6 percent in May. Your CD will lose buying power each month the rate of inflation is higher than the interest rate. Meanwhile, what about rents? While home prices have swooned rental rates are rising. According to REIS, Inc., apartment rents were up 2.4 percent during the past year and vacancies were down. “Large numbers of people have been foreclosed but they still need shelter,” said James J. Saccacio, chief executive officer of RealtyTrac. “While ownership may not be affordable and credit has been damaged, many such households can readily afford a good rental and that's important to investors.” In closing Real Estate is still a sound investment and at a time such as this a great time to get in!