|
Palacio Magazine
Time to Buy a Home?
Steve Blanton
Time to Buy a Home?
Recently national economic news has resembled the kind of fictional thriller you might see on one of the cable networks. There are twists and turns; the unexpected lurks around every corner, and we don’t exactly know how it’s going to end. Behind the unsettling news, however, is an opportunity. In some areas home prices have been falling since 2005, and are now significantly below their peak. Furthermore interest rates have fallen from their recent highs, and several programs offer assistance for the home buyers. For first time homebuyer this combination of factors represents an opportunity the likes of which has not been seen in years perhaps even decades.
Just a short time ago many may have felt that the possibility of owning a home was permanently out of reach. Not so today; home prices have fallen. The most recent statistics covering existing home sales in Jackson County released by the Rogue Valley Association of REALTORS® show that the median price of homes sold between December 1, 2008 and February 28, 2009 fell to $199,000. In many areas the cost of a month’s rent is comparable to a monthly mortgage payment.
The fall in prices is in large part because there is a glut of homes for sale in Jackson County. The traditional yardstick used to measure if a particular market favors the buyer or seller is the number of months of inventory. Total inventory (the total number of homes for sale) is divided by the total number of sales in a particular month. Six months worth of inventory is said to be neutral. Less than six months worth of inventory starts to favor the seller; conversely more than six months worth of inventory favors the buyer. Currently Jackson County has roughly fourteen months worth of inventory.
Another factor working in favor of buyers is the decline in interest rates. As of this writing, interest rates are hovering around five percent. This too is a significant drop from the highs of few years ago. In fact, interest rates have fallen by about two points from their recent peak. The drop in interest rates by itself would play an important part in making homes more affordable, but when combined with the drop in home prices, and various incentives and programs for first time buyers it makes the current time one of the best in memory for buyers.
The deal for first time buyers got even sweeter when President Obama signed the stimulus bill into law because the legislation includes an $8,000 tax credit for first time home buyers. A good REALTOR® will have the most current information on interest rates, home prices and incentive programs, all of which change every day. A year or two ago we could not have imagined what a good market it now would be for buyers. A year or so from now, we might see a completely different environment. However, for today first time buyers are in the driver’s seat.
|