Six reasons to buy a home - NOW

There is a lot of talk today about the economy:  “The worse economy since the Great Depression.”  Where were all the economic sages just 6 or 7 years ago when we had a BOOM in the real estate market? We saw some places like Nevada, Arizona and Florida seeing 30% - 50% property appreciation.  Where were the warnings of the pending “worst housing market since the 1930’s”. 

Many people tend to look at the market today and assume it will be the same for the long term future.  In a good market like 2005 they believed their 10% - 20% annual appreciation on their homes would continue indefinitely. So they refinanced their homes and took extra cash out in order to buy a new car or pay of credit card debt or pay of college tuition.  People didn’t worry about paying back the new higher mortgage because their home would continue to rise in value.

Contrary to the boom market of the middle of the decade we now are living through a very difficult period where we are seeing significant “losses” in home values and a very high unemployment rate. Most people are afraid our current economic downturn is permanent.

“The only thing constant in life is change” - Francois de la Rochefoucauld

We can all know this quote, but did you know that Mr. Rochefoucaul said that in the 1600’s?  How is that for a constant!  Nothing last forever, good times don’t last forever and bad times don’t last forever.

What does this have to do with me buying a house you ask? Everything!  If we can agree that the only thing constant in life is Change then we can agree this horrible economy we live in will not last forever.  In fact, we can be pretty sure that the housing market has no where to go but “UP”.

Six Reasons why NOW is the perfect time to buy a home:

1.       1.  A large inventory of well priced homes:  With the large number of homes in foreclosure and short sales this is putting pressure on every home seller to accept less for their home than they would otherwise accept. This means there are many very nice homes selling for a deep discount and that makes this an official “Buyer’s Market”.

2.       2. Interest Rates at a 50 year low:  You can get a 30 year FHA loan today for 4%.  That is an incredible interest rate that most of us have never seen before and may never see again.

3.      3.  Rates expected to rise:  The government is keeping interest rates artificially low because of the current economic struggles we are going through.  The conventional wisdom says if the economy shows signs of strength the government will raise interest rates which will cause the mortgage rates to also go up.

4.       4. Seller Assistance is available: With a downward moving real estate market this creates a better opportunity for sellers to assist buyers by paying for a portion of their closing costs.  As an example, if a seller wants to receive $150,000 from the sale of his home he could sell it for $150,000 or he could sell it for $155,000 and then give the buyer $5,000 in Seller Assistance. In either case the seller is receiving a net of $150,000.  The bank only requires that the home appraises at the higher price of $155,000.  Appraisals are based on homes sales over the past 6 months.  With prices dropping that means the appraisals may reflect a little higher value than prices of homes selling today.  Said another way, today’s prices are lower than prices from 6 months ago, therefore the appraised values are slightly higher than the actual selling price.

5.       5. Great time to be a ‘move up’ buyer:  For many they feel now is not a good time to sell a home because their home value may have declined.  While that may be true, for home owners who need to move up because of a growing family it is the perfect time to buy.  If you live in a small 2 bedroom home and you have three small children, you may want to move up to something bigger. If all homes have a price reduction of 7% you will actually be able to get more home for your money.  Even though you will lose value on the sale of your home you can actually get much more home for less money when you buy a larger home. As the real estate market returns to a normal market with 3% increases per year, you will be happy to have your newer larger home appreciating faster than your smaller home.

6.       6. Motivated Sellers:  Whether you are buying a home from the home owner or from the bank as you would in a foreclosure or a short sale, sellers today are motivated.  They want to get rid of their homes and they understand there are lots of homes for sale and if they have a potential buyer they don’t want to lose them.  The Buyer is in control.

So if it is true that the only constant is change, don’t let all the news stations scare you from making your next home purchase.  When we look back at these times one thing will be crystal clear – There has NEVER been a better time to buy a home than right NOW.