4 Reasons why it Might be the Right Time to Become a Homeowner
I bought my second home back in September of 2007, and probably would have been better off waiting until right now. If you are considering buying a home, I don’t think you’re going to see much more of a buyer’s market than this. There are four reasons why that is. Buyer beware, do your research first and don’t just take my word for it.
1. Market Pricing
Nobody can predict when a housing market is going to bottom, but history points to real estate prices trending upwards over time. In 2007, the average price of a home fell for the first time since 1991. That trend is expected to continue into 2008, but this most likely won’t be a long-term trend.
2. It’s Winter
In general, if your house is on the market in the middle of winter, one of two things has probably come into play.
- You need to get out quick due to relocation or not being able to pay your bills.
- It’s been there for a while and you’re probably getting tired of holding onto it.
In either scenario, the seller has little to no leverage. Also coming into play is the fact that there are few buyers out there. Many with children will wait until the end of the school year to make a move to a new school district.
3. Mortgages are at Historical Lows
With the fed’s recent .75% rate cute, many banks cut interest rates on 30 year mortgages by .5% instantly. Although the fed rate and mortgage rates aren’t directly proportionate to each other, the two are interconnected. You’re not going to see rates get too much lower than this. With not too many people buying right now, if you have good credit you are going to have bargaining leverage with banks as well, to get the lowest rate possible. Mortgage reps are people too and need to put food on the table, and right now they’ll go out of their way to make sure you don’t go to the bank down the street. If they don’t, go to the bank down the street.
4. Buy when Everyone is Running Scared
Right now is a time when fear about our economy is nearing its peak. Fear about the housing market is equally nearing a peak. Although housing prices might continue to drop for a while, the best time to buy is when people are the most scared. That gives you, the buyer, all the leverage. If you leverage yourself in the right way, it won’t matter if the average home price drops another 5%, because you will have already negotiated 5% or more into your offer. As soon as the economy picks up a little steam and houses start moving again, sellers will get their mojo back.
Are you considering buying a home? What is motivating you to buy now or preventing you from doing so?