It’s no secret that the real estate market has declined steadily during 2007. Most experts think this trend will continue into and even through 2008. But waiting for the “bottom to hit” before jumping in could be a costly mistake for at least three reasons.
First, interest rates on home loans are still at historical lows. Buyers’ markets like this come around only once every 15 years, but interest rates are usually much higher when they do. In fact, we’ve never had interest rates this low during this type of market.
Second, potential buyers have more choices now than ever. For years people were forced to purchase homes that they only “kind of liked.” They were spending top dollar, settling for neighborhoods they didn’t love, and getting into homes that didn’t fit their true needs or desires. Now, things are quite different. A buyer can find the house and neighborhood they want, plus they can negotiate an amazing deal.
Third, it will probably be too difficult to know for sure when we really hit the bottom of the market. From past experience, we see that the media begins to report a market turnaround about six months after it actually starts happening! That means people who jump in when the media tells them the coast is clear will do so six months into a sellers’ market. In the meantime, interest rates could have gone up and/or valuable financing programs may have disappeared, limiting the buyers’ options.
The reality is that a declining real estate market provides fantastic opportunities for most buyers. In particular, first time home buyers, homeowners who want to upsize, and long-term investors should be looking to take advantage of current conditions.
- First-time buyers who were priced out of the market over the past few years may finally be able to afford a home. With improved federal loan programs, low prices, and a huge selection, first-timers would be wise to start looking.
- Homeowners wanting to “buy up” have a real advantage in this market. Yes, they may take a price hit on their current home, but they will be able to take advantage of the even larger hit someone else has taken on a more expensive home. Not only that, but buying in this low market means the buyer’s property taxes will be lower than they would otherwise be.
- Long-term investors are already starting to do their research. Investors know that while real estate goes through peaks and valleys its value has always gone up. This is not the market for fix-and-flip investors, but it’s a great time for the ones looking to hold for five or more years.
If you have been thinking about buying real estate, it’s time to get serious about it. Talk to a real estate professional who can help you search for opportunities and watch prices. A realtor can streamline the buying process for you and provide you with the information you need to make the best choices. In addition, you might consider meeting with a lender to find out what loan programs you’re qualified for and to go over your credit. A good lender can help you improve your credit score and save you lots of money in interest. To be sure, this is not the market to “go it alone”! But there are great deals and great loans out there. Make sure you take advantage of them.
Traci Butler, an experienced Realtor with Lyon Real Estate in Roseville, contributed this article. Traci has a reputation for guiding her clients through the sometimes confusing process of buying or selling real estate, including whether it’s best for them to buy, sell, or wait. She may be reached at (916) 276-9975 or tbutler@golyon.com.
