1 Home prices have hit bottom or are very close to it. Especially where prices have experienced big reductions in the past couple of years, there will be little change this year or next, according to national economists.
2 Affordability is the highest in 20 years, since 1991. It’s defined as the ratio of the median priced home to median family income. Economists at Fiserv Case-Shiller, which tracks home prices, say the ratio is now 2.6, down from a peak of 4.1 in mid 2005.
Renters considering homeownership are encouraged by the current difference between rent and the median monthly mortgage payment. It fell from $745 in 2005 to $102 now. Low vacancy rates will allow landlords to raise rents next year by up to 3.5 percent.
3 Mortgage interest rates are about as low as they can go. Recently, the national average 30-year fixed rate was 4.5 percent.
Adjustable rate mortgages are even cheaper and rates for jumbo mortgages are down as well.
4 It’s a buyer’s market. With many choices, buyers can find properties in good school districts or near their jobs. And shopping takes less time.
Some investors bought properties, remodeled, but can’t find buyers. They may be willing to make deals.
5 Distressed properties and bank-owned foreclosures are good buys. Bank-owned properties sell for an average discount of 35 percent off the per-square-foot price of other homes for sale, according to Realty-Trac.
It could take two to six months to close on a short sale, but values are outstanding.
6 Homeownership is an attractive choice. It’s a financial decision but there’s more to it than that. When you own your home, you control your living environment, change the home as you see fit, and create a sense of rootedness in your community, according to Kiplinger’s Personal Finance.
You don’t have to deal with a landlord, and with a fixed interest rate, your payment will not rise because of inflation or rent increases.
