Why NOW is the Best Time to BUY!

For the past year, the media has reported increasing housing inventories creating over-supply, declining numbers of home sales, and basic “Real Estate Doom and Gloom.� It seems all you hear on the news is “Real Estate Market Boom Now Bust� or “Sellers Find Difficulty in Real Estate Market� and the perennial favorite “The Real Estate Bubble has Burst.� Now, that mindset is changing. More and more national real estate experts agree that market conditions are stabilizing and moving to a “new normal.� Historically real estate has been a very safe, secure long-term investment. In the months and years to come, you will see a return to more normal single-digit returns and stable markets.

The last five years brought a new-found frenzy to an otherwise solid investment arena. As speculators poured into rapidly appreciating real estate markets, prices soared and many buyers looking for their first home were priced out of the market. These speculators were not interested in living in a specific community; their investment strategies were based only on the fast-paced ability to “flip� properties within a matter of months. The speculative dollars unduly influenced and inflated marketplaces overnight and have caused havoc in many overheated real estate markets.

According to David Lereah, National Association of Realtors chief economist, that is all changing with markets stabilizing and overall home price gains in the near future to be more modest. “Home sellers are becoming realistic about current market conditions and are now offering more competitive pricing, in addition to some incentives or concessions, especially to help first-time home buyers,� said Lereah. “We now have the most favorable market for home buyers in several years, and most sellers (who’ve been in their homes for a normal period of homeownership) are still seeing very healthy returns on their investments. Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced by early spring, supporting future price growth.�

Low interest rates allow a substantially larger population of Americans to own their homes. The average 30-year fixed-rate mortgage remains near 40-year lows. Currently at 6.4 percent, this is more than an entire percentage point below 2000 levels. Combine low interest rates with lower home prices and suddenly buying a home is a manageable task. Research indicates that home prices will not go substantially lower. While certain local markets may see limited price declines, the national picture remains bright. Former Federal Reserve Chair Alan Greenspan recently said that housing prospects are looking up. “Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter,� he said. According to industry estimates, 2006 will be the third-best year on record for home sales.

High inventories give buyers more options when choosing their new home or investment property. Nationwide, the average market has inventory to last approximately 6 months. Presently, inventories are at 7-8 months supply with a record inventory of nearly four million homes on the market. However, total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale. As inventory starts to decline, the selection of homes will once again become limited. For prospective buyers, there may never be a better time to buy a home than right now.

Choice is another item in the buyer’s favor. With increased availability, there is more variety of property on the market. In the most recent years, our marketplace had very limited selection in a given price range, which gave buyers very few options from which to choose. That has changed with current market conditions. Whether you are looking for a cozy in-town bungalow or an expansive rustic lodge on acreage, there’s more than likely a property on the market to meet your preferences.

Low interest rates, high inventories and selection are positive incentives for purchasing real estate, but perhaps one of the best reasons for purchasing now is that real estate is an outstanding investment. Though local housing markets periodically adjust to overall economic conditions, over the long term real estate has consistently appreciated. On a national level, home appreciation has historically increased 5-6 percent annually. Not only is homeownership a stepping stone to a future of financial security, it provides a permanent place to call home and enormous personal satisfaction.

The beauty of real estate as an investment is its total uniqueness. Our marketplace is a perfect example of the individuality and diversity of housing options. No two locations are exactly alike. Even identical floor plans can have totally different looks and ambience depending on lot orientation and views. While conditions for buyers are perfect now, that is likely to change next year as sales pick up, prices gain traction and conditions improve for sellers. Under current real estate market conditions, the best time to buy is now.

Thanks to Robyn Erlenbush for her great article!

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