First, it’s a buyer’s market! Every day in the news we hear about how hard it is to sell a home and how far home prices have fallen. The buyer has a great opportunity to find the perfect home and negotiate a great deal for it.
Unfortunately, many would-be buyers have been scared out of the market by the falling home prices. They are afraid that the value of their home may continue to fall after they purchase it. This may be the case, but if you are looking at a home as a long-term investment, prices will stabilize and eventually rise giving you a nice return on your investment (There is a lot more risk if you are purchasing property as a short-term investment.). If this were any other purchase, falling prices and a wide selection would motivate people into buying now.
Second, mortgage interest rates are low. In the past few months, interest rates hit their lowest levels in the past few years. Low interest rates coupled with lower housing prices makes this market the most affordable home-buying market in years. Again, we hear in the news the problems in the mortgage market but the fact is, for borrowers, this is a great time to get a mortgage.
Third, nobody can predict the future. This is probably the biggest reason why I think now is the time to buy. Housing prices are low now – but for how long? Nobody can predict when the housing market will rebound. By the time we know, it is already begun to rebound. Trying to purchase at the exact bottom of a market is impossible – ask anyone who invests in stocks. And, housing markets are all local. Housing prices will rebound at different times in different parts of the country. Even neighborhoods within the same city will see their values move at different times. If there is a place you want to live, and you can afford it now, don’t wait until that changes.
Also, due to the problems in the mortgage market, it is getting more difficult and more expensive for many people to get a mortgage. Last year, if you had a 620 FICO Score and a 5% down payment, you would get the same rates as somebody with a 740 FICO Score and a 30% down payment. However, in the past few months, Fannie Mae and Freddie Mac have made a lot of changes that will increase the cost of people getting mortgage if they do not have a significant down payment and/or a great FICO Score. Please read "How much will my credit score cost me on my next mortgage?" and "Credit Score Affects Interest Rates Even More" for more information on this. If there continues to be problems in the mortgage market, these changes may continue. And, if you have credit issues and need a sub-prime loan, they are getting harder to find and more expensive all the time.
If you are ready, willing and able to purchase new home, now is the time to act. It has been a long time since housing has been so affordable and nobody knows how long it will last or how long it will be before it is this affordable again.
If you have been thinking about buying, I have a great tool that you can use to see the properties available in the areas you are interested in. It is free and there is no-obligation to use this service. Click on the link below for more information and to sign up.
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