Keene NH Real Estate Blog: Article -5 Reasons to Buy a Home THIS Year!

Article: 5 REASONS TO BUY A HOME THIS YEAR

Many people are afraid to buy a home in times like these, with the economy tanking and home prices continuing to fall. But if you're brave enough to stray from the herd, you might be in for the home-buying opportunity of a lifetime.

Ask for price reductions, improvements, closing costs — whatever — and the seller, desperate to get a contract, is likely to work with you, said Jay Papasan, one of the authors of the book, "Your First Home." but when the market starts improving, your negotiating power will start to diminish, he added.

"People can get a lot of what they need and almost all of what they want today," Papasan said. "Once a few people get off the fence, there's safety in numbers and you lose your leverage."

If you're qualified to buy a home now, and the purchase makes sense for your situation, and you're prepared to live in that home for at least five years, there are five reasons you may be headed for a great deal:

1. Affordability is better than ever.

According to the National Association of Realtors' housing affordability index, homes were more affordable in December than at any other point since the group started the index in 1970. The NAR’s affordability index is a measure of the relationship between home prices, mortgage interest rates and family income.

"Our Realtor was like 'Yeah, pipe dream. Like they're going to take that,' " John Chilman said. "And all they did was counter $255,000 . . . and they're paying all closing costs." The home had lingered on the market, and was listed for $310,000 just six months ago, he said.

John and Julie Chilman, for example, recently have been able to stretch their dollars in the Las Vegas area. The listing price for the five-bedroom home they're buying was $265,000; they offered $250,000.

In Las Vegas, prices have fallen 50.7% from their peak and are now where they were in the second quarter of 2002, according to data from Clear Capital, a real-estate valuation and data provider for banks and investment firms.

A report from Moody's Economy.com, released the first week of February, predicted that house prices will stabilize by the end of this year, even though the Case-Shiller house price index will fall another 11% from the fourth quarter of 2008. By the end of the real-estate downturn, prices will have fallen by double digits, from peak to trough, in almost 62% of the nation's 381 metro areas, according to the report. In 10% of the areas, declines will be more than 30%.

Not all markets have experienced huge drops, however, so it's wise to take a look at how far prices have fallen in your area. The Office of Federal Housing Enterprise Oversight's Web site has a house price calculator that can help.

2. You have a large inventory to choose from.

In many places it is taking months to sell a home, creating loads of inventory — from new homes to existing homes to foreclosures. There was a 12.9-month supply of inventory in December given that month's sales pace, according to NAR.

A large selection gives buyers more choices and drives down prices. And home sellers have gotten the picture.

It's fair to say that home sellers have become "increasingly desperate," Papasan said. "People who have had for-sale signs in the yard for six months are starting to become in tune with the reality of the situation," he said. Buyers can take advantage.

But if you put off a purchase until inventory shrinks substantially, you might not get as good a price, said Eddie Fadel, author of the book, "Don't Rent, Buy!" And be forewarned: It's nearly impossible to time the exact bottom of the housing market, and even if you do, there's no guarantee you'll make a killing.

"You buy for quality of life . . . don't buy on speculation," said Duane Andrews, chief executive officer of Clear Capital. "I wouldn't buy a home expecting the housing market to rebound quickly in the next 10 years," he said, adding that he expects moderate gains in values when the turnaround does happen.

Historically, real estate appreciates about 5% a year over the long term, said Nancy Flint-Budde, a Salem, N.Y.,-based certified financial planner. But as the country crawls out of a recession, many markets probably won't see huge home-price gains any time soon.

# posted by Carol Slocum @ 1:04 PM

Keene NH Real Estate Blog: Article -5 Reasons to Buy a Home THIS Year!

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Article -5 Reasons to Buy a Home THIS Year!

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