Buyers, What are You Waiting For?

With all the dismal news in the Media these days about falling home sales and Mortgage Companies going out of business, one would get the impression that now is not a good time to purchase a home. Don't always believe what you hear! Lawrence Yun, Vice President of Research for the National Association of Realtors predicts that existing home sales will improve markedly during this 4th quarter. He bases his prediction on the following reasons:
Pent up Demand: The job market has seen an increase in nearly 4 million jobs since the housing market started it's cool down in 2005 and typical wages have risen 7%. At the same time wealth has grown with the Dow Jones average hovering at record highs. So people have the means to buy!
Delayed household formation: Typically the number of households grow by 1.5 million a year. But in the 1st quarter of this year, the figure was only half a million. This suggests that people are holding back due to the uncertainty over the future and that fuels pent-up demand.
Rising Rents: With renters hesitating to buy, Landlords are raising rents(go figure!) Average rents rose 8% in the last 2 years. Renters are beginning to feel that squeeze, and ownership is looking increasingly good!
Better Mortgage Quality: Mortgage applications for home purchases have been rising nearly 10% on a year-over-year basis since May( Data from Mortgage Bankers Association). This focuses mainly on applicants for Prime and FHA loans which indicates people are looking for higher quality Loans.
2008 Rate Cut: Inflation looks to slide as the year proceeds. If it does the Federal Reserves could lower interest rates as soon as early 2008. Current Rates as of 9/6/07 for a 30 yr fixed convention loan with 5% down is 6.5%, This is already an improvement over Aug rates.
Listings Outlook Up: While practitioners expect buyer traffic to be flat in the months ahead, they expect plenty of sellers to jump into the market(practitioners were surveyed in July and looked ahead 6 months)
SO.... what does all this really mean to you, the buyer? To put it into simple terms, NOW is the time to buy! The supply of homes is expected to increase while the buyer pool remains low. Typically this means the ability to purchase a home at a lower price. While it does not mean you will be able to "steal a home", it does mean that Listing Agents are advising their Sellers to price their homes according to the slower market. The benefit for you the buyer, is when you purchase in a slower market, the competition is less so you are not paying Top Dollar. However, as the market improves, that home should appreciate at a higher rate.
Buyers who make the commitment to buy now could be smiling next year!
Think about that statement for a minute. If the housing market is slower now, the buyers are fewer, and Sellers are pricing accordingly, it only makes sense to buy now.
Now, think about next year, if the prediction holds true that the market will improve, the number of buyers will be higher, the demand greater, which leads to sellers pricing higher.....
You get the idea! With Interest rates holding steady, even dropping slightly, greater supply of homes, less demand..............What are You Waiting For?
Happy House Hunting!