Home prices and the economy as a whole continues to fall, but the National Association of Estate Agents (NAEA) has noted that in recent months there has been a tiny increase in activity with potential buyers and sellers in the market, which may differ from the rates. Has there been an increase of those who try to purchase a house and the number of new properties in the market place?
There are some very interesting numbers I want to share with you before I give you my answer on the question is 2009 the time to buy a house. First time home buyers were responsible for 11% of all home sales for the first half of 2009. The selling price of homes in certain areas rose last month. Real estate agents report that the number of people looking for a home to buy rose from 170 to 203. The number of sales per agent also rose from 8 to 9.
Everyone is now wondering if 2009 is the year to buy a house. In a recent survey of more than 55 real estate analysts, 60% believe that 2009 is the year to buy a house. Probably the single most important factor to look at when speaking about home sales is interest rates. The 60% of analysts who believe now is a good time to buy a house also believe that interest rates will not be raised until sometime in 2010. It is both low prices and low interest rates (borrowing rates) that will pull more buyers into the housing market.
Of the analysts surveyed, 40% believe that it is too early to purchase a house because prices are likely to fall further. The main reason they give for home prices continuing to fall is that home prices are still high compared to wages. Also, the availability of credit continues to shrink. Some industry experts are predicting house prices to fall even in 2010. JP Morgan expects home prices to fall another 10% before reaching bottom. There is a very small percentage of analysts who think home prices will keep falling until 2014. All the analysts who think home prices will drop further site rising unemployment, a continuation of the credit crunch, and the negative consumer sentiment commonly caused by a recession.
It is my opinion that you should not feel rushed into buying a house right now. You still have plenty of time. Remember, the economy is still in a recession. Big ticket items like homes and cars are the first to drop in any recession. What makes this recession worse is that banks are not lending as much money as they typically do in a recession. People are continuing to be laid off as evidenced by the rising unemployment rate. Homes continue to go into default at an increasing rate. All of these negative factors will continue to make the demand for houses be very low which means a huge supply of unsold homes will remain on the market for many months to come.
Perception has also changed about real estate. The old cliche that home prices have never dropped by more than 10% in the history of the United States has now been thrown out the window. Houses use to be considered a relatively safe investment as opposed to the volatile stock market. That perception in the market place has forever changed. It is my opinion that even better deals await home buyers in 2010.
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