03
Nov

Is Now the Time To Buy a House?

Yes, and here's why

Sold SignMany U.S. would-be home buyers have been frightened by the last several years of downward trending housing prices. They are afraid of taking on an asset that may decline in value over the next few years if housing prices are not at their rock bottom. And who knows what the rock bottom is? Because of this, an unstable job market and tight lending practices, the majority  have decided to postpone their next home purchase until the real estate market stabilizes. After all, it is a scary prospect to buy a home right now…or is it?

Timing the market is almost impossible. You are better served to go with what you KNOW to be true right now. Prices are very low today and the interest rates are very low today.  Even if you do not catch the absolute bottom of the market, lower interest rates will more than offset the difference in purchase price, resulting in a lower monthly payment.  Now is the time to buy while you have a larger selection of homes to choose from.

In an article titled “NOW Is the Time to Buy a House! Here’s why…”, Mike Castleman, Sr., CEO and cofounder of Metrostudy, a company which maintains the largest database of housing market information in the U.S., writes, “Mortgage rates currently are so low that locking them in likely will offset any remaining real estate price declines, assuming that you intend to live in the home for five years or longer.  Let’s say you decide not to buy a home this year because you are afraid that real estate values will continue to decline… and let’s say you’re right, and prices drop by another 10%.  If today’s extremely low interest rates climb by just one percentage point, your monthly mortgage payment on a 30-year fixed-rate loan won’t be any lower despite the 10% lower purchase price.  If interest rates climb significantly more than one percentage point, your monthly mortgage payments will be higher – even if you are correct and home prices do continue to fall.”  Relatively no one expects a 10% fall from current low prices, so this argument is very convincing in my book.

Today’s historically low mortgage rates are an excellent reason why now is a super time to buy a home.  Low interest rates make the cost of borrowing money really cheap, for lack of a better word.  Today’s low rates are not expected to last much longer, with interest rates expected to increase significantly when the economy in general improves. At least give some thought to taking advantage of this unique situation.

For more information, see 7 Reasons Why Now’s a Good Time to Buy a Home by Carla Fried.

Photo by Diana Parkhouse

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