Is Now the Time To Buy Real Estate?

With the falling housing market many people are wondering if this is a great time to snap up some smashing real estate deals.  As always there are 2 sides to every story.

The Pros

• If you have a good credit rating and plan to use the home as an investment and keep it for a few years than it is a great time to buy because over the long run the minor price fluctuations won’t make too much difference.

• If you are renting right now and can afford it, your mortgage payments may be at or similar to your rent.  It makes sense to invest in the equity of a property, particularly if you plan on living in the home for a few years.  It will start to appreciate and as an added bonus, you can get a tax break.
• When buying now you can lock into a good rate and you will reap the benefits for years to come.
• Some homebuilders are offering substantial discounts and high end upgrades on new homes.  Eager sellers are sweetening deals by offering incentives such as vacations and cars to enhance the deal.  Other properties such as foreclosures and fixer-uppers are selling very cheap.
• Buyers today are in the driver’s seat.  A few years ago prospective home owners had to put in bid offers, which were often above the selling price, only to find the house being sold soon after it appeared on the market. These days you can take your time, review the home and often be able to negotiate a price.

The Cons

• Don’t be too hasty.  The prices will likely drop even lower and there will be better deals so just sit tight.  According to Fiserv, a financial information and analysis firm, the national median home price is predicted to drop 11.3% by June 30, 2010 [source:Finance.yahoo.com, October 20, 2009]
• It will take time to recover from the housing slump so there will be more years to buy in at better prices.  Think of a big picture view, during the ‘boom’ some homes doubled or even tripled their market value.  These values were fueled by speculation and irresponsible lending practices.  Prices are dropping but they are still on the way down.
• If you want to buy now and flip the property in six months, now is NOT the time to buy.  Stay out of foreclosure neighborhoods, and neighborhoods that have experienced significant job losses.  Buy a home that you can afford and that you will enjoy and it will appreciate over time.