Now
Is a Great Time to Buy a Home
If you’re ready to buy a home and can afford
it, now is a great time to buy. Mortgage interest rates remain very
low. In many areas, buyers have a large inventory from which to
choose and long-term homeownership continues to be one of the best
ways for the typical American to build wealth.
Don’t let all of the negative media attention
about the “mortgage meltdown” keep you from pursuing your homeownership
dream. Mortgage industry woes are primarily limited to subprime
loans and other types of creative and comparatively risky financing
products. While the mortgage industry stalled briefly to reconsider
its more exotic loans, there is plenty of conventional financing
available for qualified homebuyers. Interest rates remain at historically
low levels – still less than 7% for the typical, 30-year fixed-rate
mortgage.
Indeed, the market has changed. It’s gone from
a frenzied seller’s market to calmer buyer’s market. In fact, buyers
haven’t seen a market this strong in years. When the national median
home price dropped for the first time on record, the decline made
huge albeit misleading headlines. For starters, there is no such
thing as a national real estate market. All real estate markets
are local and driven by local factors that include the local economy,
housing supply and demand factors and other attributes like geography.
The slight decline followed years of unprecedented
steep home price appreciation and the reality is that only a handful
of markets experienced price declines. Corrections in markets that
experienced exorbitant home price appreciation were expected and
signal good news for buyers. According to 2007 third-quarter National
Association of REALTORS® (NAR) statistics, the vast majority of
the nation’s metropolitan areas showed rising or stable home prices
with most areas experiencing modest gains.
Right now there are many homes from which to
choose and in most areas buyers don’t have to deal with the harried
and hurried competition of multiple bids. The changing market has
also changed the inventory landscape to include fewer speculative
sellers and a larger share of serious and motivated sellers.
Prospective homebuyers have some time to shop
inventory and thoroughly compare home types and prices, amenities,
neighborhoods, commutes and other important real estate-related
features. And buyers have stronger price negotiation power as sellers
compete for their attention by offering concessions or other incentives.
While all real estate markets have ups and downs,
Americans continue to consistently build wealth through homeownership.
According to the NAR:
- One average, the value of a home doubles every 10 years. During
the past three decades, home values have increased an average
of 6.6% per year.
- The average homeowner today has 36 times the wealth of the
average renter. Homeowners are essentially paying themselves when
they pay their mortgages and this means they’re building equity.
Homeowners also benefit from some real estate-related tax write-offs
like mortgage interest.
- Sixty percent of the average homeowner’s wealth is their home’s
equity. For homeowners who’re in their homes for the long-term,
home equity typically is their single largest source of wealth.
- Because every market is different, it’s a good idea for potential
homebuyers to contact a local real estate specialist to learn
more about what’s happening in his or her community and real estate
market. The bottom line in real estate doesn’t change – if you’re
ready to buy and can afford to make a long-term homeownership
commitment, it’s always a good time to buy!
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