Should I Buy a Home in Today’s Market

Everywhere I turn, the outlook looks bleak for the current real estate market. Mortgage companies are filing for bankruptcy protection left and right.

Lenders are abruptly tightening their loan requirements; making it much harder for borrowers to get funded.

Pessimistic economists are not making things any better as they declare how this meltdown could last well into the later part of 2012.

I have three questions, "Are the economists just being gloom merchants? Should I buy a home in today’s market? Or, should I wait a year or two for the market to correct itself?

My answers to your questions are as follows; YES! YES and NO!

Don’t listen to the economic pessimists. They get paid to sell information, attract advertisers and in some cases even manipulate the market. Any info they dispense, good or bad, should be taken with careful research of the facts and possibly a grain of salt. In this case, heeding their advice could be costly. Having said that, here are my five critical reasons to purchase a home now.

#1 It’s Buyer’s Market

With the abundance of properties available, it is clearly a buyer’s market. And in a sizzling hot buyer’s market, owners know their properties could potentially stay listed much longer than they would like. Consequently, not only do the prices drop drastically; many owners are willing to accommodate buyers to seal the deal.

One Cobb County, Georgia couple not only lowered their asking price to sell their home; they threw in a brand-new automobile. Needless to say, the buyers were ecstatic. Says Barry Miller, a buyer's agent based in Denver, “A buyer's market gives you leverage to get the most concessions you can from the seller.” This is a buyer’s market, take advantage of it while you can!

#2 Housing Prices Will Rise Again

Our economy goes in a cycles. To keep things simple, the market is goes up; then market goes down. We go from a seller’s market to a buyer’s market. Currently as you know, we are in a buyer’s market. Meaning that prices are dropping and sellers don’t have much leverage if any at all. But this current market will change!

And when it does, you can best believe that sellers are going to take advantage of the seller’s market. With an over abundance of zealous buyers, sellers won’t be making any concessions and buyers will find themselves trapped in fiercely competitive bidding wars. Waiting for the market to correct itself to a seller’s market will cost you dearly.

#3 You Are Flushing Your Down Payment Down The Drain

If you wait to buy and your primary option is paying rent in the meantime, you might as well flush your money down the drain. One couple signed a two-year rental lease at $1800 p/m in an exclusive condominium community in Smyrna, Georgia.

They opted to rent instead of purchasing a home because they were waiting for the market to get better. Which means that at $1800 p/m, they will flush approximately $43,200.00 down the toilet. That amounts to a 20% down payment on a $200,000.00 home. It’s a simple question to answer, “Why rent when you can buy?”

#4 Inflation Will Take a Chunk Out of You Pocket

While you wait for the market to correct itself to a sellers market, inflation is increasing the price of literally everything. Food, gas, milk, bread, cable, water, wood, drywall, windows, paint, nails, doors, bathtubs, carpet, copper, roofing material, lights, cement, permits and even the cost of moving. These increased costs are passed on to… you guessed it, the buyer. Hence, the longer you wait, the more you pay.

#5 Interest Rates Will Eventually Go Up

As you know our economy goes in cycles. Another one of those cycles is the interest rates. Right now they are still low. However, we are entering into an election year, which could bring about numerous uncertainties both statewide and abroad.

Historically, these uncertainties always impact our economy. If they cause the interest rates to go up, this upward swing could be the deal breaker for many potential homebuyers. Let’s say, God forbid that the rate jumps two percentage points by the end of the 2^nd quarter of 2008; Now perform a side-by-side comparative analysis of the monthly mortgage payment on a 30-year fixed loan at an interest rate of 6.1% versus 8.1%.

Waiting till the market corrects itself means you will pay an extra $269.51 per month, which comes to $3234.12 annually. I have to ask, “What could you do with that type of money?” Make some investments? Purchase a boat? Pay off student loans? What about reduce credit card debt? Interest rates are eventually going to go up, don't wait and get caught in the upward swing, the time to buy is now.

Harold Becker is a private real estate investor who has been successfully investing in real estate for twenty-five years. He has helped countless homeowners achieve their dream of home ownership whether their credit was bad or the market was up or down. His information is always insightful and inspiring.