Blog > Real Estate > Interest rates entice real estate investors
Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

Interest rates entice real estate investors

Today's Financial News - Posted December 19, 2008

It has been a good week for the few folks brave enough to invest in the real estate market. With interest rates at record lows and property at prices not seen in years, smart investors are moving back into the real estate game.

By Andrew Snyder, TodaysFinancialNews.Com

Baltimore – (TFN): If the real estate market truly is one of the strongest leading economic indicators, there is a very solid chance we have reached the bottom of this economic mess. A quick glance at some of the most prominent real estate-based equities shows surefire signs of improvement.

First, take a look at Ultra Real Estate ProShares (NYSE:URE). The ETF invests in a broad range of real estate-related stocks and is designed to track the Dow Jones U.S. Real Estate index. It gives us one of the widest looks at the overall market.

On a day when the major stock indices are barely changed from their opening levels, the ETF is up by more than 7%. Much of the increase can attributed to Bernanke’s bold move earlier this week. With interest rates at record-setting lows, buyers actually have a reason to dive back into the market.

With 30-year fixed mortgages coming with rock-bottom interest rates between 4.75% and 5%, the average mortgage now costs tens of thousands of dollars less over its lifetime than it did just a few weeks ago. When corporations and consumers start computing net present values of potential projects or new homes, they quickly realize they will have few better opportunities to see their money grow than by investing in real estate.

It’s FREE money!

For more proof of the industry’s headway, look at the nation’s largest builders. Hovnanian (NYSE:HOV) has added 12% on to its share price this week.  Toll Brothers (NYSE:TOL) shareholders are celebrating an almost identical gain. And DR Horton (NYSE:DHI) investors are currently sitting on gains of 8% on the week, but shares were up as much as 30% earlier.

If this week’s action does not prove to you that the markets have already experienced their worst, then nothing will.

First, we have ultra-low interest rates enticing even the most skeptical of hoarders to start putting money back into the economy. Next, we finally have a sense of Washington’s commitment to Detroit. And finally, the jobs vortex seems to be losing some of its power.

The situation certainly is not all roses and lollipops, but it is not skulls and crossbones either. Some of the most prominent and historically relevant leading indicators are pointing up.

Now is the time to slash open your mattress, pull out the moldy money and start investing. In ten years, today’s real estate prices are going to look like steals, especially if you have the opportunity to lock in an interest rate below 5%.

Call your realtor and tell them to get out of bed and start showing you some properties. Now is the time to buy.


Next Article: A lesson from a conman: Madoff’s strategy revealed

Related Articles

Posted by Andrew Snyder · Filed Under Real Estate 

Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

 Add to Technorati Favorites | Follow Us on Twitter!

Be the first to leave a reply.

Your comments are welcome