St. Patrick’s   Happy     Day                                                          Study Calls Today’s Market a       ...
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March 2012 newsletter


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Why is now a good time to buy? We are the Caleb and Jodi Moore Team of Moore and Co. Realtors. Let us know how we can serve you with your Real Estate needs. Happy St. Patty's Day!

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March 2012 newsletter

  1. 1. St. Patrick’s Happy Day Study Calls Today’s Market a Good Time to BuyOn February 13, 2012, in appreciation rate for a particular market, sense in some instances, at least in the short then it makes sense to buy, because future run, if renters invest all of their savings overBreaking News, by Robert property appreciation should be such that a period of time in an instrument thatFreedman an individual will, on average, create more generates a yield comparable to what they Researchers from several universities wealth through owning rather than renting. would earn in appreciation on a house inhave just completed a paper that looks at On the other hand, if today’s hurdle rate is their market. But since few renters couldwhat they call the hurdle rate. This is the higher than the average past property realistically invest all of their savings frompoint at which it’s equally smart to rent or appreciation for a particular market, then renting, it’s more appropriate to assumebuy if your only criterion is to build wealth. this is a sign that ownership can be a drag renters don’t invest all of their savings. AndBased on today’s hurdle rate, it’s a better on wealth creation. in these cases, owning is thetime to buy than to rent, because you can “It’s not a perfect reason to buy, it’s overwhelmingly better investment over thebuild more wealth owning than renting. just a test,” says Ken. H. Johnson of Florida holding period. study looks at what they call an International University in Miami, one of theindifferent renter. This is someone who is authors of the study, called “The Rent vs.just as happy renting as buying depending Buy Decision,” released about two weeks Reasons to buy nowon which choice is better at building wealth ago. “But it’s a good sign that the market’s turning.” 1. The worst of the price declines isover a holding period, in this case eightyears. The study assumes the renter puts the The paper is part of a series Johnson likely over. savings from renting into an investment to and some other researchers have been 2. Mortgage rates are at historicearn a return. doing on the rent vs. buy decision. This lows. The hurdle rate is the point of paper just looks at the narrow topic of theequilibrium between renting and buying hurdle rate; other papers look more 3. Qualifying for a mortgage is likely towhere it’s a wash in terms of wealth broadly at whether it makes sense to rent or get harder, not easier. building. If today’s hurdle rate rate is lower buy based on financial considerations. In 4. Less competition than the average past property one earlier paper, renting can make more From Caleb and Jodi Moore Funny St. Patrick’s Day Liners: Moore and Co. Realtors 1. A leprechaun is a short, cuddly little guy -- sort Team of a Danny DiVito with a brogue. 103 W Parkway “How Can We Serve You?” 2. My wife always serves broccoli on St. Patricks Cell: 479-857-3409 Day. But she cant convince me that its fat Office: 479-968-3300 Whether buying or selling, we’d love shamrocks in cheese assist you in your real estate needs, 3. The bosss secretary wore a green dress. She please give us a call. looks like a tree.