With all the bad news floating around in the real estate market, I though a bit of positive news might be in order. I have made the prediction that the real estate market of early 2009 has hit bottom based on the below factors.
Yes it has been a tough bear market for real estate investors but there is finally light at the end of the tunnel. Real estate activity is picking up all across the country and prices have even started to go in some markets. This may well present an historic buying opportunity.

The top 4 reasons why I believe real estate prices are on the rise:

Historic Low Mortgages Rates – The cost of 30 year mortgages are currently at historic lows with many banks and financial companies offering 30 year mortgages below 5%. Current 30 year mortgages are 4.76% on average. This means for a $ 100,000 house with a 20% down the monthly payment is about $ 429. Most people will be able to afford a mortgage payment of this amount and, in many cases, this payment will be substantially below what it will cost to rent that same house. This creates a tremendous incentive to buy versus rent.
Vey Low Home Prices – Home prices have fallen 20% to 50% across the county and home affordability has increase substantially with the lower prices and very low mortgages rates. The ratio of the average home price to the average persons salary has finally come back into historical normal patterns and means the average person can now afford the average house.
Not Enough Building – Home builders are not building enough new homes to meet population trends. With the US population growing at close to 3,000,000 per year we need about a 1,000,000 new homes per year. We are currently only building about 400,000 to 500,000 per year. This will put a tremendous demand on existing homes and will create competitive bidding and upward pressure on prices.
Stimulus Package and First Time Buyers – The stimulus package recently pass by Congress has several incentives for first time home buyer of $ 8,000 that will spur many new buyers into the market.

The results of these factors will mean a large increase in demand for real estate homes and a lack of supply that will drive real estate prices up for the next 10 to 20 years until these imbalances are finally resolved. So is today a historic buy opportunity? I would say yes and that real estate prices should see 5% to 10% increase per year for many years to come.