Is now the right time to buy?
Housing prices are low, potentially near the bottom. Interest rates are low, hovering around 6%. Now could be the right time to buy if you are a first time home buyer or a move up buyer. There are several considerations to make and the decision should not be taken lightly.
Is there a need for you to make a purchase.... expanding family, job change, down sizing, etc...
Does it make financial sense to purchase a home. Building equity vs paying rent, tax ramifications, etc...
Will you be making a purchase for the long term. If you cannot live in your new purchase for 5-7 years, now might not be the time to make a change. Conventional wisdom is if you can stay in your home for seven years you will be riding out most housing cycles.
If you are a first time home buyer, get your finances in order. The next 9-12 months might be an opportune time to buy. No one has a crystal ball but the market has seemed to start to level off and many are predicting the bottom is near and the market will turn in the next year. Don't get caught into timing the market and hitting asolute bottom. It can turn fast and leave you in the dust. First time home buyers, have the opportunity to take advantage of a $7500 tax credit for a purchase occuring before July 2009.
Move up buyers, if you have equity in your current home, now could be the time to make a smart move. Yes, your house may be worth less than it was 3 years ago, but so are the houses you might consider purchasing. Do some simple math...
say 3 years ago your house was worth $100,000, and you wanted to purchase a 200,000 house....
thats a differential of $100,000 adding approx $700 to your mortgage....
today, your house is qorth 10% less, so $90,000, but so is your purchase worth less....$180,000
thats a differential of $90,000 adding approx $630 to your current mortgage...
savings of $70 a month or $840 dollars a year.
Remember your housing goals and what makes sense, not what your house might have been worth at the peak of the market.
Regardless of your situation, make careful considerations. If buying seems to make sense, now could be the opportune time for you to buy. There are people who bought at the peak of the early 90's and then had the market crash, but in 2008 they are sitting pretty with tons of equity in their home. The key in housing is the ability to gain equity over time. Not short term, but intermediate or long term.