We get asked often if now is the best time to buy a home. Without being dramatic and me telling you that I need to dust off my crystal ball, I will lay out some facts in graphical form for you.
The Real Estate market peaked mid 2006 to early 2007. The 3-9 month stretch in the “peak time” is because it took some of the country and specific cities time to catch up and adjust to the fall of the nations largest sub-prime lender. In some areas you had the dominoes started and in some it took longer to move the foundational card “flicked” to topple the house of cards.
We have seen a decline of over 40% across the USA with regard to real estate prices to date. How much lower will they go is anyone’s guess. I have heard estimates of 10-12%. I also believe in certain markets, we have hit “bottom”. Before you slay the messenger, let me quality that statement of “I also believe in certain markets, have hit bottom”.
If you have a neighborhood that has ZERO in the way of foreclosures, with homeowners that have been there since the 1990’s. If those homeowners have not taken out Home Equity lines of Credit, or mortgaged further their homes from original financing, you can bet those homes are in good shape as far as value. There is no base line. This applies even more if the are within a 1 mile radius of other homes that are in the same shape. Ask any appraiser in today’s market that is doing appraisers for the banks that are lending money. They will tell you how scenario is a “nightmare” due to all of the different levels of appraisal report review today with the banks.
The largest future declines are going to be with the more expensive homes. If you take an area that is currently valued at over 1 million dollars in price range; add a few notice of defaults, put some of those NOD properties on the market as short sales and you are going to get a decline in the coming months. Add to that some homes hitting the foreclosure market – Bing, Bang, Boom… Get the picture?
That is when you have to weigh the benefits of buying a home at the current interest rates or stand by hoping they will remain at the sub 5% figure. Money is cheap, but hard to get(oxymoron). That is usually not the way that equation works. When interest rates were historically low, the “qualification” process was no where near as difficult as it is today.
Get with your lender. If you don’t know anyone, we have some of the BEST Mortgage Brokers and Main-line Banks we can advise you about. See if you can qualify. Get your payment at today’s rates and at the price range you are most comfortable in. Then have your real estate representative get to work.
Have them look at the Notice of Default Filings. Have them approach some of those “distressed” homeowners and advise them they have “you” wanting to buy their home! See if your Real Estate agent can get you that “under-market” deal. Have your agent check the current foreclosure inventory and see if there is anything that fits your bill.
Also, get market values and sold home prices – have your agent give you the numbers of decline. Comparables and Real Market Values are not just for those wanting to sell real estate. Buyers can use that information to their advantage.
Reproduced with the permission of Mortgage-X.com