Is it still a good time to buy Real Estate?
According to the most recent Standard & Poor’s Case-Shiller index, housing prices have fallen back to 2002 values nation wide, with some of most heavily hit regions of our country even reaching levels we haven’t seen since the late 1990’s. In addition, it is expected that prices may continue to fall through at least the end of this year. However even with this prediction of further depreciation, there are still many factors that indicate why it is still a good time to buy.
According to Freddie Mac mortgage rates are at their lowest levels in 50 years, with rates hitting 4.55 in beginning of June. With rates this low, the amount of money a person would save on their mortgage payment would more than make up for any further lose in value this year over the term of the loan. In many parts of the country, these low interest rates result in a mortgage payment that is well below what you would expect to pay in rent for the same home you would be purchasing. The only difference is that you would have the freedom that comes along with owning your own home, vs. having to follow the rules of your landlord. In addition, when you take into account the tax deductions you get from owning a home, the overall cost is reduced even greater.
Housing affordability (ratio of median home prices to median household incomes) has also dropped, and is now well below the last 20 year average. According to Moody’s Analytics, affordability is currently 20.9% below the average for the last 15 years ending in 2010, and is 12.5% below the average from 1989-2004. This means that if you are a person just now entering your early 20’s, housing affordability hasn’t been this good in your entire life. In addition, the increase in distressed inventory over the last several years has created an opportunity for buyer’s in today’s market to pick and choose amongst the best homes on the market. However, this increase in availability will not last forever. Moody’s is already predicting that the amount of distressed sales will begin to decrease in the next couple of years, and that prices will then begin to increase.
Although the short-term impacts on home ownership may not appear promising, the benefits from owning a home in the long term still remain a strong driving force to buying a home.
Should you have any questions or need further information,
please don’t hesitate to contact me, (775) 220-1630
Or visit my website: www.SellingHomesinReno.com
Joshua Talayka
NAR designated: Short Sale & Foreclosure Resource
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521
Source of Information: The Wall Street Journal
About The Author
Joshua, thank you for a well written post. I completely agree that with interest rates below 5%, right now may be a prime time to purchase, either for primary residence or as investment. With houses in all areas selling below replacement cost or construction cost, in my opinion, it is only a matter of time before this inventory passes through and we find ourselves in a market re-adjusted to real prices and value. There are even a few hearty builders still producing new construction. It may seem dim right now, but there is a light at the end of this tunnel and we will survive.
Wes
336-6131