It’s time to buy a home! That is right you heard it here, no more doom and gloom for the real estate market. The time has come to go out and buy some real estate. The only thing holding buyers back has been consumer emotion but a look at the facts should help buyer feel more confident in opening up their wallets for a great opportunity in today’s housing market. JP Morgan’s Market Insights report has outlined why people looking to buy a home have never been in a better position. Here are just three important points from the JP Morgan report. The Price is Right One measure the report looked at was the ratio of personal income to home prices. “Since 1966, the median price of an existing single family home in the U.S. has varied between 150% and 251% of personal income per household. However, roughly three-quarters of the time it has been in a relatively narrow band between 185% and 230%. In September 2011, the ratio was just 153%, implying that to get back to an average price to income ratio, home prices would have to rise by about 27%.” Mortgage Rates are Right Mortgage interest rates are at historic lows as compared to personal income. The report notes, “During the week of October 7, Freddie Mac reported that mortgage rates had fallen to an average annual level of 3.94%. Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966.” What this means is that it is a buyers perfect storm. Buyers who buy now will likely reap a long term financial gain by buying a home at a lower than average cost and financing it for a lower than average cost. It is a win-win situation. Home Ownership Beats Renting The report goes on to look at the cost of renting versus owning. JP Morgan predicts that by the “third quarter of this year, we estimate that the implied median mortgage payment had fallen to just 78% of the median asking rent. In other words, at current mortgage rates, home prices would have to rise by 35% just to get back to their average relationship to rents.” Home buying is now more affordable than it has been in decades. Home prices are at all time lows, mortgage rates are at rock bottom and income levels remain steady. Despite what you may hear on the nightly news home ownership has never been more affordable.]]>
Buy a Home and Watch Your Money Grow
Before you decide to buy a house, it is crucial that you consider various factors beforehand. Some of these factors can be as straightforward as making sure to choose a home in a good area, and making certain that the property is also in good condition. However, it is also important to consider the housing market, because it is imperative that you buy a house at the right time. For example, if you are in a market where there is a huge demand for homes for sale, then the prices of houses will generally be high, and so if you are buying a house for investment purposes, this wouldn’t be the right time for you to make that purchase. With the market starting to creep back up buyers will be looking to get a good deal before demand goes back up so selling a home right now can bring great results.
On the other hand, if there is less demand for buying houses, then the price of property will generally be very low, thus making it the perfect time to buy. Right now is a fantastic time to buy a home with the slower market interest rates at the lowest in years. Buying a home in a down market can become a great investment down the road. You can consider it like a savings account. Buy the property in a down market, and watch your money grow.
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According to Lawrence Yun, the National Association of Realtor’s chief economist, the spring housing market is starting off strong. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. The NAR expects sales to rise between 7% and 10% in 2012. What does that mean? Strong demand has melted away inventory in some housing markets with investors and first-time buyers vying for bargains, homes are being snatched up as soon as they hit the market. Prices may not be shooting up, but homes are once again selling at a rapid clip in many markets, draining the multiple-listing services and turning up the competitive pressure on buyers. Multiple offers and bidding wars are back. Lately if a buyer is not there the first day a home comes on the market, it’s gone. When a quality property that is priced accurately comes on the market, it’s not going to sit around. In some areas the competitive environment has already begun to nudge prices up slightly. Bargain prices and historically low interest rates are bringing buyers back. The belief among buyers is that the housing market has already turned the corner and that there won’t be a better time to land an affordable home. National Association of Realtors President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, says market conditions are improving as supply and demand have become more balanced.]]>