Recently all of the negative media attention about the "mortgage meltdown" has many buyers second guessing their pursuit of homeownership. When actually, if you are thinking of buying a primary or even a secondary home and can afford it, now is a great time to buy. Mortgage rates remain very low and in many areas, buyers have a large selection of inventory to choose from. The negative hype flooding the news is primarily reflecting the predatory subprime loans and other types of creative and risky financing products that caused the mortgage industry to stall briefly, but there is still plenty of conventional financing available for qualified homebuyers. Interest rates remain at historically low levels - still less than 7% for the typical, 30-year fixed-rate mortgage.
The news reports are right about one thing though, the market has changed. In most areas the market has gone from a competitive seller's market to a favorable buyer's market. In fact, many analysts say that nationally buyers haven't seen a market this strong in years. And while it is important to consider national averages, as a consumer you must remember that all real estate markets are local and driven by local factors such as the local economy, housing supply and demand factors, and other attributes like geography. Nevertheless, According to the 2007 third-quarter National Association of REALTORS® (NAR) statistics, the majority of the nation's metropolitan areas showed rising or stable home prices with most areas experiencing moderate gains.
This turn in the market to favor the buyer, gives buyers two new distinct advantages. First, prospective homebuyers now have some time to shop inventory and thoroughly compare home types and prices, amenities, neighborhoods, commutes and other important real estate-related features, instead of constantly dealing with multiple offers and bidding wars. Second, buyers also have stronger price negotiation power as sellers compete for their attention by offering concessions or other incentives.
While all real estate markets have ups and downs, Americans continue to consistently build wealth through homeownership. According to the NAR:
- On average, the value of a home doubles every 10 years. During the past three decades, home values have increased an average of 6.6% per year.
- The average homeowner today has 36 times the wealth of the average renter. Homeowners are essentially paying themselves when they pay their mortgages and this means they're building equity. Homeowners also benefit from some real estate-related tax write-offs like mortgage interest.
- Sixty percent of the average homeowner's wealth is their home's equity. For homeowners who're in their homes for the long-term, home equity typically is their single largest source of wealth.
Because every market is different, it's a good idea for potential homebuyers to contact a local real estate specialist to learn more about what's happening in his or her community and real estate market. The bottom line in real estate doesn't change - if you're ready to buy and can afford to make a long-term homeownership commitment, it's always a good time to buy
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