We all have heard the many doom and gloom reports about the current real estate market but few of us are able to discern what are the FACTS and what is just hype. We all know the media loves to build UP it’s stars and then TEAR them down. A certain lady with the last name of Spears comes to mind huh? 
Real Estate was the darling of the media during the dot com days when real estate sales were hot and homes were apreciating at incredible rates. Now that things have slowed to a NORMAL market the media has decided to build the spin into bad news. So what truly are the facts?
1. 30% of all real estate in this country is owned free and clear–No mortgage.
So this (rather large) segment of the real estate market is unaffected by all the sub-prime issues or general media negativity. 30% of all homes are at zero risk.
2. Currently only 7/10 of 1% of all homes in this country are in foreclosure.
Sure, there are more foreclosures happening now than in the past few years and yes, people are being affected which is very sad. However, these statistics are NOT overwhelming and the housing world is NOT falling apart. Watching the news lately would make you think that there are foreclosures in every neighborhood.
3. The net worth of a home owner is 46 times higher than a renter.
Incredible but true. Your home is not a stock that is bought and sold on Walll Street. We need food, shelter and clothing as our basic life necessities…a stock certificate is NOT a necessity, a shelter IS. Homeowners benefit from the power of leverage. Over 10 years a $10,000 investment in the stock market at an average 10% rate of return will yield $23,600. That SAME investment as a downpayment on a $200,000 home at a normal appreciation rate of 5% would return $110,300–Nearly 5x more than the stock market.
4. NAR expects 5 million homes will sell this year
Yes, this is down 2.1 million homes from the high of 2005 but the combination of increased consumer spending and the sub-prime problem added to this very unusual jump in real estate sales. Why unusual? Because for the past 40 years the average number of homes sold has been 4 + / – million. Consistently increasing but slowly… from 3 million homes sold in the 1970’s to 3.9 million homes sold in the 1990’s. Not wildly out control.
If you check out the bar graph below what is very interesting is that the average number of home sold during the decade of 1970 was 3 million, during the decade of 1980 it was slight increase to 3.3 million, during the decade of the 1990’s it was 3.9 million….increasing slightly but in thirty years still staying stable. From 2000- 2007 that number wildly jumped to the high in 2005 of 7.1 million. In addition it was the first time in history that 40% of the homes were NOT owner occupied (15% is normal and considered stable)
