It's a great time to buy in Nutley for recently married couples
Who would have thought that there'd be a silver lining to the stock market tanking, credit markets freezing, unemployment topping 10 percent, consumer spending screeching to a halt, and the dismal economy wreaking havoc with your wedding budget? But this difficult economic environment has actually created a unique situation if you're in the market for a house. For first-time buyers with good credit, a steady income, and enough cash for a traditional down payment, there's never been a better time to buy real estate.
"Significant price corrections over the past three years coupled with the government's efforts to stimulate the home-buying public have created an amazing opportunity for home purchasers in New Jersey and around the country. Right now is a particularly important time for the first-time home buyer."
Here's why:
Record-low interest rates. Thirty-year mortgage rates remain near historical lows, hovering around 5 percent. When you compare this to rates of 9 percent in the 1990s or 18 percent in the 1980s, you'll see why this is such a big deal.
For example, for a mortgage of $300,000, you'd pay $1,610.46 a month at 5 percent, $2,413.87 at 9 percent, and $4,521.26 at 18 percent. Today's low rates are allowing many couples to afford houses they previously could never have imagined owning.
But Turpin advises that these record low rates are not here to stay. "The government has announced that it will pull back on purchasing mortgage-backed securities, which most analysts agree will drive our currently low interest rates much higher," he says. "So even if home prices continue to fall, the value in waiting is likely to be erased by rising interest rates."
The $8,000 tax credit. Available for first-time home buyers purchasing homes less than $800,000, this sizable tax credit, which was part of the government's stimulus program, has been approved by the Senate to be extended until April 30, 2010. This applies to single buyers with incomes up to $125,000 and married couples with incomes up to $225,000.
"Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership," says Charles McMillan, the president of the National Association of Realtors.
Prices have begun to stabilize. While it's impossible to predict when the market has reached rock bottom, Turpin sees prices in New Jersey's Morris, Somerset, and Hunterdon counties down 10 percent from a year ago...and 25 percent less than three years ago. And prices for first-time homes are beginning to level off. "Some markets, particularly where the schools are highly ranked, with an appealing downtown, and where there is good train access to New York City will begin to level off in the lower- to mid-level price ranges," says Turpin.
But do your homework if you're buying a $2 million home or are looking in a town in the western part of the state. Turpin predicts that towns further out will continue to depreciate, as will homes in the luxury market. "Until absorption rates get in line in the upper end, that market will continue to correct," says Turpin.
Home inventories remain high. Thankfully, the days of bidding wars and houses going above asking price are a distant memory. The seller's market has shifted to a buyer's market, which means that you can take a bit more time deciding on the home that's right for you. But keep in mind that houses priced just below their value in a great location will continue to sell quickly, so don't take too long if you find your dream home.
Find a good realtor and a mortgage broker who can walk you through the entire process, and don't just go for the largest house on the block. Location, schools, and access to New York City seem to equate to long-term value, so it makes sense to drive around and find the town that's right for you.
"I don't have a crystal ball, and certainly New Jersey has its share of woes," but our state has been a good bet for a long time, and I think it will continue to be. Nutley New Jersey is a beautiful place to live, with much to offer. These things will stand our state in good stead and should make it a desirable place to live going forward."
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