Why 2009 Could Be A Great Year to Buy A House

The Maryland real estate market has changed over the years from a seller’s market to a buyer’s market just like the rest of the country. Even though it is likely home values could still depreciate I still think 2009 could be a great year to buy real estate. Here’s why:

Interest Rates are Low

The government is stepping in to make sure that interest rates are low for home purchasers. Recently,  I have seen fixed rate loans with a couple points in the high 4% range. Typically 30 year fixed rates without points have well been below 6%. That's about as good as I have ever seen it. In fact, that compares with the historical lows we saw several years back. Look at the table below and see the savings yourself.

Prices are Very Low

In Montgomery County prices were down nearly 18% from the same time last year, across the board. That means a $500,000 home in 2007 is now a $410,000 home or a $18,000 per $100,000 spent savings. Coupled with lower interest rates the long term savings and benefits are huge when comparing buying a home this year over the past several years!

Inventory Is  Up

There are thousands of home to choose from. You have plenty of time to make a decision and you can always look at a home several times before wring an offer. In January 2004 there were around 1,800 or so listings on the market not including new homes. In January 2008 there are over 5,000 homes for sale. That is almost 3 times the homes to choose from.

Sellers are Negotiating and Paying Closing Costs

Most sellers will pay a large percentage if not all of your closing costs. Closing costs are typically around 3.5% of the purchase price. As well, the average home is selling at about 91% of its asking price. Sellers are negotiating. A large portion of the inventory is bank foreclosure property. banks are in the banking business not the real estate business. They are liquidating their property and you might be able to get an even better deal.

The Market Truth

Financial benefits of buying a home now as compared to recent years past are quantifiable. I feel that I can honestly say that if you are in it for the long term, this is really a great time to buy.

Warren Buffet says," Be fearful when others are greedy and be greedy when others are fearful".  

It is clear others have become fearful and are liquidating their real estate assets. Now could be the time for a savvy investor to make money over the long term.