Many potential home buyers are questioning if this is the right time to step back into the housing market. The housing market has been one of the hardest hit sectors of the economy. Pundits are divided as to whether or not this is a good time to buy a home.
It could possibly be years before the economy and the housing market can make a full recovery. Nobody can call the housing bottom until values have stabilized and are increasing across the nation. Amidst all of this uncertainty, could now be the right time to invest in a home?
A quick Internet search will reveal many different opinions on whether to buy now or wait. It could very well be the right time for YOU to buy, based on lower property pricing and historically low mortgage rates. Educating yourself about the current market situation, and determining your needs and time frame is essential before you decide to invest in a home.
Many people believe that because property values have fallen so low, homes are now undervalued. While there are certainly some homes on the market now that ARE undervalued (priced lower than what the market can bear), not all homes are underpriced. REO homes (those that are now bank owned due to foreclosure or deeds in lieu of foreclosure) are not necessarily priced below fair market value.
Yet in the middle of all the uncertainty about when the housing market will fully recover, and whether or not housing values and prices will fall further, there are some facts that do support buying a home now. Mortgage rates are approaching historically low levels, and house prices are at values not seen since 2003. This could be a very good time to buy if you intend to keep the property for several years and don’t mind waiting for the housing market to stabilize.
It is thought by many that the low mortgage rates are not likely to last beyond the first quarter of 2010. The Feds have been keeping mortgage rates low by purchasing mortgage backed securities, but that subsidy will end March 31, 2010. At that point, most analysts believe rates will rise.
Low mortgage rates allow a potential home buyer to qualify for more home at the same monthly payment. There is no way to know now how high or how quickly mortgage rates might rise, but rates are currently about 1% – 1.5% below where they were just a year ago, so that can create a substantial opportunity for a home buyer.
In addition to the low prices and low mortgage rates, the government is encouraging home purchases with the first time home buyers tax credit of up to $8,000, and the existing home buyers’ tax credit of up to $6,500. Buyers must have accepted purchase offers no later than April 30, 2010, and must close on that purchase by June 30, 2010, in order to qualify for the tax credits. Some states are offering additional cash incentives.
Throughout history, the United States has experienced many recessions. In fact, boom and bust cycles are normal from an economic standpoint. While this recession is considered to be the most severe since the Great Depression, no one doubts that it will end and housing values will increase again. Historically, property has been a great investment. It is quite likely that those who purchase now will reap financial benefits after a few years.
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