Will it ever be a good time to buy a new home again? News from the real estate market has been ugly for a while, and it really doesn’t seem to be getting much better. Property values are continuing their downward spiral and buyers are pretty much non-existent in this market. With the odds so stacked up against the housing market, I believe it is a GREAT time to jump into the real estate market.
That’s right, it is a GREAT time to buy a home! Sure it goes against all logic and the opinions of your closest friends, but now is the time to jump into the real estate market. Here’s my thinking on this…Look at current property values. I recently read in the Wall Street Journal that an index of 20 major metropolitan areas showed property values have fallen over 16 percent since their peak a few years ago, and in some areas, that decline is over 20 percent. Sure, values may continue to decline, but it is anyone’s guess as to how much more they will decline until they hit bottom and start to climb back up. Most economists agree that we have pretty much arrived at the bottom and we should start to see the increase again once inventory starts to thin out.
How about the bargaining power you have? Most sellers these days are competing against a lot of other product, so not only are they lowering prices, but offering concessions as well. Ask the seller to throw in some closing costs, which could be upwards of 3 percent of the purchase price on a new home, or several years’ worth of home owners dues (HOA) if applicable. New home developments have been hit harder than most in the downturn of the market. Standing inventory and developers looking to close out a new building or tract may even be willing to take the loss just to get them out of the market. I recently heard a story of one development that would match a down payment up to 10 percent. So coming to the development with 10 percent down will net you a 20 percent down payment when you sit down with the pre-approved lender for that development.
Lending qualifications have become more stringent over the last year, but while those qualifications have tightened, loan providers are eager to find qualified buyers in a shrinking pool. Add to that the bad loans already out in the market and on their books, a lender will do almost anything to get that qualified buyer pre-approved. Take advantage of those historically low interest rates and programs that are currently available. If you have a secure job and income history, you can pretty much write your own ticket.
With home values on the decline, many people are looking at areas they once thought they could never afford. As most real estate professionals will tell you, like an up market, this down market will not last. Real estate is cyclical. What goes up, comes down, and what you can afford now, you may not be able to afford later once home values start to increase and the next cycle begins. Simply, the current conditions may not last much longer, so take advantage of the situation why you still have the opportunity.