The latest home prices data has just come in. According to the S&P/Case-Shiller National Home Price index, Quarter 1 home prices are down 19.1% over this same period last year. For those looking for a bottom to the real estate market, this is an indication that it may not have arrived. As long as home prices are still falling, there will be analysts looking for the bottom.
But how do you know when the bottom arrives? The problem with trying to time the bottom of the real estate market is that you do not actually know that you have been successful until the time has passed. You might wait and wait, aiming to buy just when prices are at their lowest, only to find that the bottom has passed and now home prices are on the way up.
Even if you don’t wait for the real estate market bottom, though, you can get a good deal. With home prices this low, you can find good bargains. Combine the low home prices with the fact that mortgage rates are also low and that the government has a number of incentives in place to encourage home buying, and you will find that you are in a pretty good place. Even if home prices fall another 10%, or more, you will still have got a good deal if you move now and take advantage of the current conditions and incentives.
It is important to note, however, that buying now should be a prelude to holding on to your home for the long-term. House flipping is not very likely in this market, so you should plan to be in your home for at least five to seven years. This will give the housing market some time to recover, and give you the chance to build some equity.