According to Freddie Mac, this environment of low home prices and low mortgage rates has created the highest housing affordability since March 2005. According to the NAR, this rare buyer’s market could disappear in the upcoming months. The National Association of REALTORS® Chief Economist Lawrence Yun calculates that about 1.4 million renters could have bought homes during the past two years. They chose not to because of negative press and media reporting about real estate.
The $168–billion Economic Stimulus Act of 2008, signed into law Valentine’s Day, is expected to unleash pent–up demand with tax credits and investment incentives. The hoped–for tidal wave of buyers entering real estate markets nationwide is expected to revive home sales and lift the economy. It will also end this buyer’s market.
Buyers—especially first–time buyers—will lose their unique advantage as home inventories decline and real estate markets recover. Freddie Mac predicts that, a year from now, interest rates for 30–year fixed–rate loans will be at least a half point higher than today. Home prices will be higher, too. Taken together, these conditions will make homes less affordable, especially for first–time buyers.
So where’s the good news? If you had bought a metro Phoenix home back in January 2001 when the median price was $122,000, it would be worth $220,000 today. That’s an equity gain of $98,000! You could enjoy that kind of appreciation as well, especially if you bought now while homes are so affordable.
This buyer’s market is the perfect opportunity to get in while the market is down—the first time in almost 40 years—and to start building wealth. If you’re a first–time home buyer, you’re entering the metro Phoenix housing market at a historic moment. Prices have fallen and mortgage rates are low. Home inventories are high, and so is housing affordability. You have a rare opportunity to claim your first home and to begin enjoying the many benefits of home ownership including long–term appreciation. That’s the good news!
Seize the moment! According to The 2007 NAR Profile of Home Buyers and Sellers, 84 percent of first–time home buyers said they relied on a real estate agent for help finding a home and navigating the buying process. Half of all first–time buyers also said that their agent pointed out previously unnoticed faults in homes they had been considering.
If you’re a first–time buyer, you can take advantage of this market currently weighted in your favor. But you have to act quickly. Now is the perfect time—and maybe the last good time—to buy your first home.