The New York Times recently published an article about why it’s time to buy a home now, specifically citing that the long-term home ownership picture is looking rosier with each passing month. The article is rather long and involved so for the benefit of my readers, I will do my best to
recap:
- Mortgage rates remain near 50-year lows, hovering around the mid-four percent range.
- Due to the consistent waves of foreclosures, the glut of homes on the market remains high (3.1 million more than normal), allowing for an inventory plethora and therefore loads of housing competition.
- According to real estate research firm, Moody’s Analytics, foreclosures will begin to decline steadily in 2013, thus drying up much of the housing inventory which will subsequently increase prices.
- Although home prices fell by 7.5% in April over the same period a year earlier, if you exclude the distressed sales, prices are off by just 0.5%, another sign that prices are beginning to recover.
- On a nationwide scale, the demographics of home buying—as measured by the number of new households, changing from renting to owning—increased by almost one million and should average 1.2 million over the next decade. The 2008 level was 578,000.
- For the last few years, national averages indicate that renting a home has been cheaper than owning a home. But as the economy mends,
there are signs that roles are being reversed. Specifically in that rental prices are on the upswing and home prices continue to fall. - Although national unemployment remains high, the ill-affect that it has on real estate is beginning to lessen. For every slow job growth market like Des Moines, you have a much quicker growing and healthier employment market such as Dallas, therefore
leading to more home sales in those fortunate cities. - Mortgage financing remains attractive for borrowers with good credit and a solid employment history. But borrowers with sub-standard credit and inconsistent income will continue to have financing difficulties. There is speculation that lending will remain tight for the next six months.
- The jury is still out in regards to the overall psychology of the real estate market. Many people are still resigned to the fact that they will simply not buy until the number of foreclosures drastically dips and unemployment is a more normal 6%. Others are realizing the opportunity of capitalizing on the ultra-low prices and the extremely attractive interest rates. To each their own.
What I take from this: Home buying is, has been (at least for the last 18 months or so) and will be (for the foreseeable future) a positive and potentially lucrative investment. Smart buyers will employ creditable and proven Realtors to help with the purchase of their home and before long, will enjoy the fruits of homeownership with the knowledge that they are building equity in their home and forging a happy and comfortable
future.
-NHP-
Tags: affordability, credit, demographics, home buying, new york times, psychology
