Now is definitely the time to buy… maybe.

With a fairly simple yet very important question like, “is now a good time to buy?” you would think there might be some consensus among the experts… but you would be wrong! Currently, real estate information in the media is so wishy washy, and gives you so much contradictory advice, it’ll make your head spin! Truth is, the real estate market is still fairly unpredictable in our changing economy. And with lenders rolling out new re-modification programs, strengthening lending guidelines, here today gone tomorrow buying incentives, and less than streamlined foreclosure processes, it’s tough to to say for sure whether or not the time is NOW. But not to worry, there are plenty of reasons to be optimistic. And for the right buyer, those reasons definitely point to now as an excellent time.

In many ways homes are more affordable than they have been in decades. With interests rates at, or near, record lows for qualified buyers, it’s almost like free money! Well, that’s a little over excited, but still, historically low interest rates averaging 4% (currently around 3.5%) for a 20 year fixed loan is nothing to scoff at.  Owning may be less costly than renting and, after all, your money is going toward ownership (yay, equity!). Whether or not prices will rise or fall is not necessarily the question. Will it cost you less or the same each month on your mortgage as it would to rent? And if yes, even if prices do drop further, in the long run your home will likely be worth more than you paid in 2012.

Still, the question of home prices is a major issue. Many assert that the slump is not over, not even close. Is it possible that prices continue to fall, even up to 20% more? Well, yes, anything is possible. Just ask your carefree self in 2006 if that dreamy real estate market would not only stop it’s upward momentum, but would turn around and drop 30 to even 50 percent in most parts of the country in only a few years. You would have laughed and skipped away. Well, maybe not you, but someone might have.

Excess inventory, being held onto by mainly the banks, is the problem that may cause a further drop in the market. This “shadow inventory” as people call it (sounds ominous right?) could take years for the market to absorb, and all of that extra supply makes the low inventory that’s currently helping boost prices a false positive. Some experts say that excess inventory even totals about 2 million houses. Because many sales moving forward will be on bank owned properties (previously foreclosed homes, or REOs), which sell 10 to 20 percent less than similar homes, that may cause a further drop in prices.

But before you get too scared, bank owned homes have already been on the market and contribute to our current prices. Furthermore, lending institutions such as Bank of America are rolling out loan re-modification programs to prevent the necessity of foreclosure and keep future REOs off the market. It makes sense. Why go through the hassle and expense of paying numerous professionals to get the foreclosed borrowers out of the house, let the house sit empty and fall into disrepair (not to mention the damage caused by the former owner who was told to leave), repair the house, bring it up to code for resale, hire a real estate professional whose commission you must pay, and sell at current market value which may, in fact, be less than the price settled on in a loan re-modification? Well, if you think about it the loan remods may be the banks’ best bet. And this would keep many homes off the market before they become part of the ominous “shadow inventory.”

And in other good news, the stats are looking positive for stabilization. Prices have stabilized in most cities and nationally for the last few months, and show improvement over last year. According to the National Association of Realtors data, the median list price in July held steady at $194,900, roughly the same as the previous two months but 2.63% above the median list price in July 2011. And, the median age of inventory was down -9.27% compared to one year ago, meaning houses are on the market for less time before selling. Low inventories, rising list prices and lower times on the market are all positive signs that stabilization is taking place.

But before you get out your checkbook and call your realtor, think about whether or not you are a good candidate for home ownership in this market. If you have bad credit, forget everything you’ve heard about 3.5% interest rates… yours will be significantly higher. Interest adds up, so even if the market does start to climb (slowly at best), it may not be worth it. And if it does drop further, well, you won’t be very happy. If this is you, start working now to repair your credit so you can take advantage of the excellent interest rates that make now a great time to buy!

And, if you think the time is right for you, makes sure you’re prepared for ALL of the costs of home ownership. The down payment is only the first major expense. Take into account insurance and taxes, repairs you want and need to do on the home, and the general cost of up-keeping the home. You’ll need a cushion, so if the down payment alone leaves you and your bank account seeing stars, save up a little longer before taking the plunge.

To sum it up, I can say with certainty that now is definitely the time to buy… maybe…


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