Monday, February 9, 2009

5 Reasons to buy a home right now.

I recently read an article, 5 Reasons buying a home in 2009 is a bad idea, whose author gave 5 reasons not to buy a home right now. It is this type of negative publicity that is making these difficult timeseven tougher on the economy. The same article projects the market to continue to slump for another 18-24 months. If everyone shared the author's negative view, I could see why it would take so long for the economy to recover. Those thoughts sound to me as if the author has her finger on the panic button. The real problem is that the public perception and consumer confidence has been severely diminished by the negative media that is being dished out.

Let's look at this from a different angle. What if I told you that the economy was in the toilet and instead of suggesting that we try to stimulate or revive it, I reccomend that we all hunker down and wait it out. Everyone should just stop spending money as much as possible or at least until merchants and service providers start giving everything away. We should all go back to the days when people raised livestock, grew their own vegetables and made their own clothes. How many jobs would that save? How many marriages?...How many lives? Well, I don't think it would do much to help the economy either.

With that said, allow me to offer my real world perspective and give you 5 reasons you should buy a home, right now.

  1. Mortgage rates are near record lows. - Waiting to see if home prices will drop any further may increase the risk of mortgage rates creeping up higher. A rate increase of 1% can be the same as adding $10,000 to the purchase price of a new home. Considering median prices in most areas vary from $150,000 to $200,000, you would need to expect another 5-7.5% reduction or more in home prices to benefit should the rates go up a full percent between now and the time you decide to buy.
  2. How low will they go? - Some markets are already much lower than they were a couple of years ago. Keep in mind that these are the same markets that saw huge increases before the housing bubble burst. In fact, home prices are back in line with where they should be if you take in to account a steady growth rate of appreciation. The housing bubble caused a spike in the normal growth rate and eventually led to the severe downturn we are experiencing now. But is it really a downturn or a righting of the ship, putting us back on the course we should have been on all along. Take a look at this graph and decide for yourself.Real Estate market Growth Chart.
  3. Housing growth and market conditions

  4. Timing is Everything - The person who wrote the article suggests the best strategy is to wait until the market has bottomed out before making your move. Good advice except for the fact that, unless you're a pyschic, no one knows when the market has hit bottom until it starts rising up again. By then it's too late and you've missed it. The chart below illustrates market trends. The "safe zone" represents a favorable time to buy. The "lucky zone" is ideal, but if you notice the point that you realize these zones are after the market has shifted. I believe a few market places may be within or close to a "lucky zone." right now.
  5. Market Trends and Timing the market

  6. Choices, choices, choices - Given the decline in homes being bought and a steady increase of homes on the market, the choices available are mind-blowing. In a sellers market, there is usually not much to choose from, therefore they can ask for more money. In today's buyer's market you can have your pick. You will find plenty of homes in top condition with lots of extras in desirable locations and at very reasonable prices. What more could you ask for?
  7. Help your fellow citizen - The government knows that the best way to stimulate the economy is to get people to spend money. This will create a domino effect that will allow retailers, manufacturers and others to create jobs, thus put more money into the economy. It's a cycle. The same with housing. There are many homeowners out there that are struggling financially and need to sell their current homes in order to free up their own cash flow, reduce debt or relocate to a new job. By buying one of these homes you would be, in part, stimulating the economy. How cool is that to take part in the American dream and help out at the same time?

Although it may sound like I am attacking the article that gave reasons not to buy, in all fairness, the same author wrote a similar article: 5 reasons buying a home now is a wise move.

It's a buyer's market. Why aren't you buying? What are you waiting for?

Regardless of your season of life, there are good honest REALTORS that would love to help you realize your dreams of owning a home. I am one of those REALTORS and I put the "real" back in real estate. I service many parts of South Carolina, however if you are not in my area please keep in mind that part of my job is putting people all across the United States and Canada in touch with a real estate agent that will provide honest, dependable service. Whether you or someone you know is thinking of buying or selling a home. Call me first.

Greg Worley
Keller Williams Realty
Columbia, SC

ActiveRain Real Estate Social Network

Tuesday, February 3, 2009

A look back at Groundhogs Day and a Call to Action

Puxsutawney Phil, the Seer of Seers, Prognosticator of all Prognosticators, saw his shadow, thus predicting an extended Winter. Given his stature and fame, I wonder if good ol' Phil would mind giving us his forecast on the country's current economic condition.

Punxsutawney Phil

While we may not yet be able to change the weather, we can unite and strongly influence the economy.

The news relayed by the national media outlets paint a grim and gloomy portrait. This information may speak truths about some markets, however it is not a fair representation of the status of all individual and local markets. As a result of the national media, consumer confidence is at an all-time low. We as a nation can take action to jump start an economic recovery one house at a time.

If you are a homeowner who is still deciding whether or not to sell, here are a few things to consider.

  1. Let's say you want to upsize your home. Now is a great time to do so. Be open to the idea that you may take a loss on the sale of your current home, but by the same account (or discount) you will be receiving a better price on the nice new larger home. When you do the math you will find that your savings on the new home will be greater than the loss on your old one, which means an overall net savings for you.
  2. If down-sizing is what you had in mind, whether to save money or because of financial difficulties, there may be a solution for you, as well. Banks are more willing, now more than ever, to work with you and help you absorb the financial loss and avoid foreclosure.
  3. If you don't have to sell, move or you're not struggling to make your payments then don't sell. It's a buyer's market. You can afford to wait until it's a balanced or seller's market again. You may want to consider refinancing to take advantage of the low rates.

On the other hand, if you are looking to buy a home, now is the perfect time. It's called a buyer's market for a reason. I'll give you three.

  1. Low Rates!!!
  2. Low Prices!!!
  3. Lots of Choices!!!

It's simple. Mortgage rates are at an historical low. Did you know that in terms of your payments a 1% reduction in rate is the equivalent of a $10,000 reduction in the home purchase price? Let me put it another way. The lower rates mean that you can buy more house for the money. With lower prices, it means you get double the bang for your buck. Not to mention you have your pick of homes with high inventory levels.

If you are a buyer waiting for the market to hit rock bottom, I suggest you get off the fence and buy now. There are only a lucky few who can claim to have bought when the market bottomed out and even they didn't realize it until after the fact. The truth is, as you patiently wait for the market to hit bottom you will not know it has until prices begin to go back up. At that point it's too late. You missed it. Bummer. Buying now will insure you of getting a good price, rate and selection. In turn, you will be helping out sellers who may be struggling to make ends meet, avoid foreclosure or take a new job through a relocation. This my friends will help families free up what was once disposable income that can be spent on other goods and services, which will lend to the local economy and begin to spread until the economy is once again headed in the right direction. It's a domino effect and buyer's hold the key.

Still not convinced that now is the time to buy. Well I don't know about all the markets out there. However, I do keep track of what is happening in my local market. (Columbia, SC) From 2007 to 2008 the number of home sales dropped 20.6% in our area. Home prices, during the same time only slid 1.7%. Meanwhile in another market area in SC home sales dropped 19.6% while home prices actually increased 2.4%. There are many reporst coming in from December and ealry January that activity is increasing. For some areas around the country the market may have already bottomed out.

So what are you waiting for?

This is my real world perspective. I'm putting the "Real" back in real estate.

Greg Worley
Keller Williams Realty

Monday, February 2, 2009

This Month In Real Estate (US): January 2009

This is a very informative video on the current real estate market conditions as a whole. If you would like to know more or have questions, contact me.

Your local economist of choice,

Greg Worley
Keller Williams Realty