The good folks at Trulia are trying to make your life easier as a real estate investor by offering a Rent vs Buy tool.

Here’s a sample:

This is definitely worth a look, especially when you’re looking at the macro-level of markets.

Enjoy:  http://insights.truliablog.com/vis/rent-vs-buy-q3/

Despite the growing concern over the US ability to remain solvent, interest rates are flat.  This shows that despite debt concerns the US is still seen as a safe haven.  I don’t think there was ever a real risk of default considering the US brings in sufficient revenue to pay the interest on its debt, social security, and medicare.

Thankfully for home buyers rates have held steady keeping housing affordable.

Interest Rate Chart:

With all the talk about job creation and high unemployment lately, I read an interesting fact today; with the existing population growth an estimated 90,000 jobs need to be created each month just to keep the unemployment number where it is today (9.2%).  That’s an impressive number of jobs being created in a lackluster recovery just to break even.  After reading this, I started thinking about population growth’s impact on the housing market.

To keep up with population, an estimated 1.6 million new homes need to be built every year.  This includes 1.4 million strictly from growth and an estimated 200,000 from fires, tear downs, etc.  We need to be building 133,333 home per month, every month to meet this demand.  According to the May report from the Census Bureau we’re on pace for 560,000 homes this year or 46,667 per month.  The deficit is 86,666 homes per month.  To give some perspective, the US population grew by 28 million people in the last decade!

According to CoreLogic’s Shadow Inventory Report (Q1 2011) there were an estimated 1.8 million homes in the shadow, down from 2 million 1 year earlier.   The National Association of Realtors estimates that 3.72 million homes are available and on the market.   While the total of 5.5 million homes is staggering, the number has been as high as 6.5 million.

A health market doesn’t rely on the number of homes but rather the supply in a number of months of available inventory.  Typically a market that has 6 months or less of supply is considered healthy.  Currently there is over a 9 month supply of homes on the market.  This number is working down and is off nearly 25% from peak supply suggestion solid absorption of excess inventory.  The lack of building is no doubt helping this and we’ll likely see this accelerate as vacancy rates are plummeting and the second home market is picking up.

I know it seems impossible to comprehend but I believe we’ll be in a health market in 12 months with a tightening supply in many markets in the US.

After weeks of holding steady, mortgage rates rose this week according to the latest survey by Freddie Mac.  The 30-year fixed mortgage rate rose from 4.51% last week to 4.60% this week.  The 15-year fixed was also higher from 3.69% to 4.75%.  The 30-year fixed rate is now higher than last year when it averaged 4.57%.  The 15-year fixed remains lower than last year when it averaged 4.07% this week.

Chart:

The US cities with global reach reach cities are also the top performing real estate markets according the Urban Land Institute.  This should come at no surprise.  Washington D.C. for example, has been one of the best real estate markets in terms of growth primarily because of ballooning public sector (our fastest growing industry!).

Don’t expect much in the way of cash flow though.  Most of these markets are capital appreciation plays, if you can afford them.

Here’s the list straight from the Urban Land Institute.

I’ve been charting inventory in Central Florida (Orlando MSA) for a while now.  The inventory is in steep decline and the market is seeing some price rise.  Both median and average sales prices increased marginally but the inventory compression is forecasting a comeback in home prices:

This week, on my column over at BiggerPockets real estate investing blog, I discussed lower interest rates, a report on negative equity, and a survey on homeowner confidence; enjoy

This week news surrounding pending home sales, interest rates, delinquency, and housing starts were the highlights.  You can read the full post on BiggerPockets real estate investing blog; enjoy!

Has the real estate investor officially returned to the housing market?  A number of indicators point to the return of real estate investing including Move.com’s survey Real Estate Investors Set to Become More Active.  Of course this isn’t really news.  Investors account for 20% of the market according to NAR, a percentage which is trending down from 25% of the market towards the end of last year.  The Move.com survey also states that 22% are bullish on price increases, half expect prices to stay the same, and 23% are bearish. So it looks like the consensus is a price flat line.   I think the question is wrong.  If the reason you’re buying real estate as an investment today is only for the price rise, you might be missing the real opportunity; buying for income.

Fundamentally if a property doesn’t have a strong yield and you’re buying only for the inevitable price increase, it may take longer than expected to achieve your price target. Over the last 2 years buying real estate as an investment has been treacherous.  Many of us investors learned hard lessons from the crisis of just how illiquid real estate is. Today the rental market is robust and there is significant demand from outside the US for our real estate.  These factors have buoyed residential investment property, leaving some still holding the real estate they bought 5 years ago in a better position.

The last 2 years have ushered in a new type of real estate investors, many brave new and experienced investors, but often new to real estate investment.  I haven’t seen many stories on the investors that have been in the market over the last 2 years. Meanwhile people buying into real estate during this time have taken great risk knowing that prices are still in decline, financing is difficult, and the economy is sluggish. The trade-off is that short term price declines won’t affect the annual yield.  The IRR might not be is strong when compared to a perfectly times bottom when the property is resold; but resell?

Interest rates found another new low for 2011.  The 30-year fixed rate eased from 4.61% to 4.60% for the week ending May 26th, 2011, according to Freddie Mac. A year ago the 30-year fixed mortgage averaged 4.84%. The 15-year fixed dropped from 3.80% to 3.78%. A year ago the 15-year fixed stood at 4.21%.

Softer rates are are result of slowing economic activity.  While the rates are good for home buyers and lending, it hasn’t been enough to stimulate any major activity in the real estate market.

Here’s my latest chart:

As you can see the trend at the beginning of the year was up.  I still believe this is the larger trend.  A sluggish economy is to thank for recent pause in interest rates; just be advised that rates seem to rise much faster than they fall.