Purchase a Home in Today's Market? Is it Wise and Possible?
Buying a home in today's market may be a challenge. And given the economic news we're getting, it may take nerves of steel to jump in right now. But there are many homes on the market right now that are great values. If you have good credit, money for a down payment and are pre-approved by a bank, there are homes that may fit your needs.
There are many factors that make buying a home today a great option. Interest rates are near their all time lows. The rate on a 30-year, fixed mortgage is hovering around 6 percent. By contrast interest rates were hitting 8 percent and higher during the last market downturn, and were between 10 and 12 percent at the height of the last housing boom in the 1980s. Lower interest rates make it easier to qualify for a loan, and your monthly payments are more affordable.
Another factor impacting the real estate market is that today there are many homes for sale that are bank-owned because of foreclosures. The banks are taking anywhere from a 30% to 50% loss on these listings. It's true not all bank-owned properties are good deals and that dealing with these sales can be a challenge, but with help of a good Realtor there are bargains to be had.
The same can sometimes be said for so-called "short sales" (short, because the seller is asking their lender to take less than the amount left on the loan.) These are even harder to put together than bank-owned properties and much trickier as well. It is really important that you are working with an experienced realtor who is on the same page as you are. And be careful--just because it's a short-sale or an bank-owned property doesn't necessarily mean it's a good deal.
"Normal" sales--a property that is not a short sale or banked-owned property-- are easier to purchase today than just a few years ago. The value of properties has finally adjusted downward from their peak highs during the real estate boom. Buyers are finally able to find affordable homes. And there are choices.
The length of time a home remains on the market before it is sold has increased from roughly two weeks in 2004 to between eight and nine weeks in 2007. According to the unsold inventory index provided by the CALIFORNIA ASSOCIATION OF REALTORS®, it would take 16.3 months to sell all the homes on the market at the current sales pace, compared with 6.4 months in 2006. With more homes on the market for longer periods of time, now you have more choices when it comes to selecting a home.
I often hear potential buyers say "I think prices will drop even more and I am going to wait." Of course that is their prerogative. But over the long term across California the median sales price for a single-family home has been consistently rising for several decades. In short, housing remains a solid, long-term financial investment. While the pace of home appreciation has slowed over the last year, historical data suggest home prices will continue to appreciate over time. The projected median home price for a single-family home in California in 2008, for example, is $553,000. By comparison, the median price in 2000 was $241,350; $193,770 in 1990, and $99,550 in 1980. (source: C.A.R.)
In the Bay Area it's a great time to buy. So if you are ready to buy, find a service oriented, caring, ethical Realtor®. Get yourself preapproved by a lender. Start your journey for that home that you have always wanted and that is now attainable. Contact me when you are ready for that journey to purchase the biggest investment of your life. Why rent when you might be able to purchase in today's market?
Call Jean Powers a Certified Residential Specialist and Broker Associate at Kane & Associates.
Jean can be reached by email at Homes@JeanPowers.com or by telephone at 510.908.9002