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 The Buying Process

Housing prices are at their most affordable in a decade, but suddenly, mortgage interest rates are rising.

What should you do? Buy now or wait for better real estate market conditions?   

It’s wise to stop and assess any change in the market. In housing, market conditions change constantly. The trick is in knowing what those changes can mean.

Higher interest rates don’t mean it isn’t time to buy, just that credit is getting more expensive. That’s not surprising considering how long interest rates have been held low.  They could go much higher, or they could drift back down again.

You won’t know unless you wait. And if you wait, you might miss out on the home of your dreams.

The most you can do is work with your REALTOR® and your lender to determine what you can comfortably afford in today’s housing market. You may be surprised to learn that conditions are better than you think.   

Why buy now?  

Right now, you have unprecedented market conditions. Low mortgage interest rates, low home prices, and high inventories have lasted more than three years. Inevitably, one or more of those conditions will change for the better or worse.

What’s worse for you as a buyer is that prices can rise, interest rates can rise, and inventories can deplete.

Even the most determined market timer knows the odds of getting all three market conditions at their most optimum are slim, yet you may have those conditions right now in your market. You could also have ideal market conditions a year from now.   

So what’s in your favor today?

Home prices

If you buy today, in many markets, you’re buying at prices not seen since before the boom, and in some areas, before that. Meanwhile, your salary has likely risen at least 1% annually for the same period, enabling you to buy more house with less money.

Interest rates

Even though interest rates are higher, they are still far from Freddie Mac’s historical annual median – 8.95% on a 30-year fixed rate qualifying loan.

By creating a secondary market for housing loans via Fannie Mae and Freddie Mac and federally-insured loans through the FHA and VA, the federal government can support banks to lend out more money at affordable rates to home buyers.

Inventory selection is premium

Housing inventories are being inflated by distressed homes. As job losses increase, we may see further foreclosures, so it’s likely that selection will remain attractive for some time.

However, inventory is being gobbled up by first-time homebuyers and investors, who are 45%  to 50% of the market, and 18% of the market, respectively.

That means that while inventory is building on a national level, it could be depleting in your area and price range.

Incentives

If you’re a qualifying first-time home buyer, you can take advantage of an $8000 tax credit, either as a deduction off your income tax or as funds to put toward closing, buying down your mortgage interest rate or adding to your down payment. And based on recent legislation effective through December 31, 2009, you don’t have to repay it.

Tax benefits

Uncle Sam helps all home buyers with tax incentives. If you factor in the tax deductions you receive for mortgage interest payments, private mortgage insurance, points paid in purchase and equity loans, property taxes, homestead exemption, capital gains exemptions, and more, you can come out way ahead, even if your home loses value.  

What’s to be gained by waiting?

Wait if you think your job is at risk or if your credit needs improving. Otherwise, there’s little else to prevent you from buying.

Prices might go down further, but you’re risking that interest rates will also go down again, too. If they do, congratulations. If they don’t, ….well, who said we could predict the future?

The bottom line?

Just as favorable buying conditions don’t last forever, neither do recessions. As the economy improves, many incentives will disappear and your competition for desirable homes will increase.

The best time to buy a home is when the time is right for you.

Contact Me

I can help you with every aspect of buying or selling your home because I’m experienced, because I am a Better Homes and Gardens Rand Realty Real Estate Professional . . .and because I care.   

As your Better Homes and Gardens Rand Realty Sales Professional, I will provide you with the information you need to make an educated decision.

The relationship between a home buyer or seller and their agent is based on trust, shared goals and understanding.  I strive to continually improve and to do this I listen and take the needs and wants into consideration.

For assistance with any of your real estate needs, please contact me, whether it's to get started on helping you realize your goals and dreams, or just to ask a question - no pressure, no hassle, no obligation - just a friendly conversation. I would welcome the opportunity to make a difference for you.

© 2009 Anthony Stokes-Pereira. Is a Full-Time New York State Licensed Real Estate Salesperson. All rights reserved

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