Wow, can we be hit with any more doom and gloom financial news? Over and over, we are bombarded by the media as to how bad things are in the economy, which leaves you thinking that now is actually a poor time to buy a new home. Gas had been hitting record highs week after week, inflation is still increasing at a faster rate than in recent years, people are losing their jobs, and the real estate market is being pounded by the many adjustable rate mortgages (ARM) that are now adjusting to higher payments, many of which people are unable to afford. Despite the current state of affairs, now is definitely a good time to buy a house.
According to some, the outlook to buy a new home may be grim – it’s reported that existing home sales will decrease nearly 7% this year, and new home sales are expected to decrease 19% (1). And with a nod to the times, real estate developers in San Diego, California are offering a ‘two for one’ deal – on homes, that is (2). Real estate is going through an adjustment period, and for many potential buyers, now is a good time to buy a house if there are available funds to secure the financing. Mortgage interest rates are still low compared to historical data, and home prices are also similarly low compared to what some of them were 1-2 years ago. The point I’m trying to convey is that now is, in fact, a good time to buy a house for those buyers who weren’t able to buy a new home when the real estate boom was happening. People looking to buy a new home and invest in properties (keeping them for a long-term period) would also benefit from the current state of the housing market.
Making the Most of Your Investment
Many financial speculators recommend that, while now is a good time to buy a house, you need to keep the property for three or more years; however, if your plan is to buy a new home and then sell it within that window of time, you’d be better off renting. Furthermore, with the current volatility of the market, it’s hard to calculate the outcome of it all and when it will end (3). Many websites now provide a practical calculator tool to analyze and compare the cost of renting versus buying and which is better for your economic situation in the long run. To judge for yourself if now is a good time to buy a house, plug in your statistics to Real Estate Journal’s online calculator.
Housing will continue to go through tough times and will probably remain slow or stagnant for the next 2-3 years. There are an incredible amount of homes for sale on the market far exceeding the amount of people who are looking to buy a new home or who can qualify for financing. To give you an example, as of today’s writing on July 17, 2008, there are more than 106,000 homes listed for sale with local real estate agents in metro Atlanta. That number doesn’t even include the ones being sold by the owners themselves, likely constituting a couple thousand more. First time home buyers with good credit and down payments of 3-5% of their purchase price can benefit by getting the right assistance from many sources that help decide if now is a good time to buy a house.
Finding Affordable Homes
However, the resistance to buy a new home is not happening everywhere. Seattle, Atlanta, and Dallas, for instance, are not feeling these strong depreciation downturns like other cities in California, Florida, and Arizona are (4). In these areas, it is not unusual to find homes that were selling for $449,000 last year and are still on the market today at $349,000 because they haven’t sold. A friend of mine recently sold her house at 68% of the home’s appraised value because it had taken one full year to sell. Since the home was completely paid off, she wanted to move it as soon as she could and no longer cared how much less she was going to get. She ended up selling it for $10,000 less than what she had paid eight years ago. Stories like this become persuasive evidence of why now is a good time to buy a house.
Finding affordable, quality homes and assisting home buyers with the financing are the types of things the company I am associated with and other similar companies can do for people who are ready to buy a new home. The more we are able to inform them as to what options they have available and what they can do, the easier it will be for the market to slowly but surely recover and keep things from getting worse for those in financial distress. Again, if you are looking at the long run when you decide to a buy a new home (five or more years), you will be able to benefit with the conditions the market is currently giving you, hopefully encouraging you to understand why now is a good time to buy a house.
What Are You Waiting for? Buy Now!
There are many websites out there that can point you in the right direction and help you decide, in your particular case, if you are ready to buy a new home and if it is beneficial for you. Some buyers are worried about timing the purchase of a home to the exact minute that prices drop to their lowest points. The opportunity to a buy a new home may be too late at that point, and timing anything as unpredictable as a good time to buy a house is, after all, impossible. Search around for the right home: research the neighborhood to get a feel for that location’s housing market, continue to build up your funds, and talk to real estate agents and mortgage lenders or banks (5) that can help you decide if now is a good time to buy a house. Those in the know can give you first hand advice when you’re ready to buy a new home at a price you feel comfortable with.