THIS MAY BE THE BEST TIME IN HISTORY TO BUY A HOME.
If you can just ignore the media for a second and look at what is really happening in Northeast Wisconsin regarding the housing market, you will realize that NOW is the best time to purchase a home.
When the media talks about median home values dropping by as much as 20-25%, they are speaking about areas of the country that have experienced abnormal appreciation over the last decade. Areas like Florida, Arizona, and California. Some of these areas would boast that home prices have doubled in just a couple years during the investment boom of the early 2000's. In Wisconsin we experienced a low and steady growth of 2-4% appreciation per year. This stability has sheilded Wisconsin from huge shifts in the marketplace which allows a more confident arena to invest in real estate. Wether you are purchasing an apartment building or your first home to live in, you are investing in Real Estate. Even during the worst real estate slump that Wisconsin has seen since the early 1980's, we have seen home values plateau, maybe even drop in value 1-2%, but we have escaped huge decreases in Value.
On the surface, the market apears a scary place to be in. This current market condition is going to be very temporary and the window of opportunity for purchasers will close as soon as recovery is evident which could be in just a few months to a couple years from now. What opportunity? Regardless of what type of market we are in, people need to sell their homes in the event of a life change. Houses still become too big or too small for the current Owners. Job transfers, Divorces, Deaths, Bancruptcies, Foreclosures, are all happening in greater volume than at any other time in history. The result is a large inventory of homes that are very competitvely priced, a huge pool of motivated Sellers, and the best negotiating platform for Buyers that presented itself in decades. Buyers can usually find a home where improvements have been made to make it more saleable, with Sellers that are willing to "deal" with a qualified Buyer, allowing the purchaser the ability to Buy a home in better-than-average condition for lower-than-average price.
Put into this mix the low interest rates that are available for home mortgages, which currently are bewteen 6.25% and 6.75% on a 30 year mortage, and you have the formula for taking advantage of the best environment from which to purchase a home. You may not think that interest rates in the 6-7% range is good, but historically this is a lower interest rate than you could have received in over 30 years. Yes, we did see rates dip into the 5-6% range a couple years ago, but this was a freaky low that will probably not be seen again for a very long time. It is more likely that we will see interest rates above 10% in the future. Bottom line; interest rates are probably not going to get better (lower) for a very long time, so take advantage of the rates NOW!
"BUT SELLING MY HOME NOW WILL COST ME EQUITY". If you are selling your home to move down in home value or to give up ownership completely, now is probably not a good time to sell. If you are selling your home because you want to improve your lifestyle or gain living space, then now is the absolute best time. The general rule is that the lower price that your current home is valued at, the more demand for your home there is right now and the less of a loss you will experience. Actually, if your home's value is between $ 75,000 and $ 160,000, you are probably still experiencing a 1-2% appreciation in Value. The rapid first-time home buyer market fuels the sales in this price range. The higher the price range that you purchase into will usually net you a better deal.So, If you are moving up in value, you will have less of a loss on your sale and more of a savings on your purchase resulting in a substantial net gain in your transaction. You will have the piece-of-mind that when the market recovers to a normal 3-4% appreciation, you will be earning much more appreciation on the more expensive home.
This financial strategy is not new. It is done in the stock market all the time. Buy when the market is low, sell when it is high. Right now is your chance to make the best investment decisions in your life!