Is this the time to buy a house?

As a New York State licensed real estate salesperson, I am often asked by people who are considering buying a home if this is the right time (or at least a good time) to buy a home. While there is no simple answer to that question, the answer largely depends on individual circumstances, including need, employment, credit rating, etc.

1. As we all know, the United States (as well as almost the rest of the world) has been going through a prolonged period of economic difficulties that has not been seen so widely in eighty years. In many parts of the country, home values ​​have plummeted, while in others there has simply been a big drop in market value. While a handful of areas have begun to see a resurgence in value, most of the country is still in a period of stagnant, if not price declines. With these low home prices, combined with historically low mortgage interest rates, a home buyer will have significantly lower monthly maintenance costs than in the recent past. In fact, some areas are seeing their lowest home prices in a decade! However, today’s real estate market is also different for buyers in that most lenders are much stricter about down payments (most require 20%) and require significantly higher credit scores for qualify for a mortgage. Additionally, home appraisers are much more conservative in setting values, meaning that the 80% that the bank is willing to lend is based on a lower home price and therefore could, in certain circumstances, require an even higher down payment from the buyer. However, if all of these conditions are met, the buyer is trading in a Buyers’ Market (more sellers than qualified buyers) and is therefore in a fairly good trading position.

2. Does the buyer have a home that they are selling at the same time? If he does, it may take longer for him to sell his house and he will receive less for his house than he would have received a few years ago. However, the trade-off of also buying another home for less money combined with low mortgage interest rates will generally be to the individual’s advantage.

3. Many potential buyers today are wary of the market and fear their own job security. Most potential buyers are acting more cautiously, and some are just making offers that even determined sellers find insulting because there is a “want to get it on a bargain” mentality. When determined sellers and qualified buyers look realistically at the market and don’t take an attitude of what it was, buyers are often doing quite well.

4. Is the potential buyer considering this purchase short term or long term? While no one can know for sure how long this recession will continue, most consider us near, if not the bottom. People who bought homes three to five years ago have seen their home values ​​drop, but others who have lived in their homes much longer still have tremendous equity in their homes. Most experts still believe that houses are good long-term assets, because they have historically outperformed the rate of inflation. For those looking for the short term, there is always more risk!

5. Because the real estate sales market has slowed, in most areas the rental market has seen higher occupancy rates. With lower home prices and mortgage rates, combined with the fact that personal real estate remains one of our few substantial tax deductions (interest and real estate taxes are deductible), in many circumstances it’s actually cheaper to buy than to buy. rent. However, like everything else in real estate and in this economy, this varies depending on the area of ​​the country and the circumstances of the individual.

Is it time to buy a house? It all depends on your qualifications, credit, personal circumstances, needs, and your goal, but for many qualified individuals, this is a great buying opportunity!