The recent drop in home prices may be starting to level off
The recent drop in home prices may be starting to level off. You can almost feel it starting to happen. For the first time in a long time folks are starting to talk about purchasing homes again. If you are wondering about your local real estate market there are some very basic ways to determine what the market will be do moving forward. Do you notice friends and family starting to talk about buying a home? Have you started to see those homes that have been on the market for 8 months with sold signs in the front yard? There are basic indicators that you can watch for in your neighborhood and your city. Real estate is typically localized as far as values etc., thus national reports on home prices may not be a good indicator of value for your area.
Foreclosures are still rampant in the marketplace and there is no sign of a decrease anytime soon. Foreclosures have a drastic effect on home values and can substantially decrease areas home values. There has been a fear for many potential new home buyers over the last year or two. Home values dropped so rapidly that any thought of buying a new home was quickly put to rest for Americans over the last few years. FHA loans are becoming increasingly popular recently. These loans allow you to buy a home with as little as 3% down and there is no credit score requirement. This opens the door for many new home buyers to qualify with little down payment. There will be a great window of opportunity opening for buyers that plan to stay in their home long term. The market will be reaching a bottom as far as home values are concerned within the next 12 to 24 months in my opinion. As with most markets we typically do not know where the bottom was or will be until months after it has already happened. This is due to lagging economic indicators and lagging real estate market figures.
The bottom line is simple. The market is getting close to a recovery. It may not be there yet in your area but it is getting close. Stay poised. Don’t be irrational. Do not ever buy a home with a mortgage that you do not feel completely comfortable with. Please stay away from adjustable rate mortgages and payments that seem too low to be true. 30, 20, and 15 year fixed rate mortgages are the only financing that you should consider when buying your home, unless you are very knowledgeable about mortgages and have a situation that requires another mortgage product. Your home can and will still be one of the best purchases and investments that you will ever make. Be educated and use good judgment. There will be a lot of money made when the housing market recovers and it is time to start considering the purchase of a new home.