Here are a few facts about the current Twin Cities real estate market:
- There are many affordable homes across the Twin Cities metro area.
- Interest rates are still historically low.
- And, there is that $6500-$8000 tax credit that is going to expire very soon.
But do these reasons alone make it a good time to buy a house?
I ran into an old colleague of mine in a Forest Lake parking lot earlier this week. We used to work for the same real estate broker a few years ago and chat from time to time. This day was no different. After the initial hellos, the conversation drifted to the real estate market. He is not selling much these days as he hates working as an agent in this market. He doesn’t think it is a good time to buy for most buyers. However, he did make a couple of personal investments this past year, choosing to ride out the market by taking advantage of the foreclosures in northern Washington County and rehabbing them for resale. He offered his view of the market as a “terrible time to buy for a first time buyer”. When I questioned his logic he said, “First time buyers have to compete with buyers like me. There were seven offers written in a few days on one of the homes I purchased. I didn’t finance the home. I could close in a week for cash. How can a first time buyer ever compete with that?”
How indeed! That is a good question. But then again I have talked to two other investor/agents this past year with a different view of this current market. These guys were rehabbing homes long before the market took a dive. They paint a picture of the market as a terrible time for a rehabber to buy a home. First time buyers and first time investors are driving up the prices on bank owned properties so they cannot buy at a reasonable price to turn a decent profit.
I find it interesting that three people who have all worked in real estate for years have such differing views on the current housing market.
So, do I think NOW is a good time for a homebuyer to buy?
First, let's turn back the clock a few years to the late 1980’s when my husband and I purchased our first home. According to history, it was a terrible time to buy a home…but we didn’t know any better. We needed a place to live and didn’t want to rent. Interest rates were in double digits at the time and we still had student and car loans so what we could afford versus what we wanted was not quite in line. We ended up purchasing a house from relatives by assuming their 9%, 15 year loan.
We purchased at the time not because someone said the real estate market was good or bad but because it made sense for us to buy rather than rent. We didn’t buy our “ideal” home, we bought an adequate starter home that we could afford. We knew we wouldn’t live in this home forever but it was priced fairly and it was a place to start. We lived there for eight years. Though it wasn’t a good time to buy for many home buyers, the purchase made sense for us.
Many people will be rushing to write a purchase agreement in the next month in order to take advantage of the expiring homebuyer’s tax credit. That should not be the ONLY reason to buy a home. Buying a home in any market is a personal decision and whether it is a good time to buy will really depend on the buyer, the home, the price and what happens in the future. While no one has a crystal ball on the future, a good REALTOR® and loan officer can help potential buyers determine if NOW is a good time to buy depending on their unique situation.
So...In my opinion, it really IS a good time for many people to buy a home…but might not be the right time for all.
Comments(12)