When it comes to buying a home, now might be the best time in 20 years to do so, according to economists and real estate experts.
“Recent data continues to suggest that the bottom in the U.S. house-value cycle may have been reached,” says Freddie Mac Chief Economist Frank E. Nothaft in an August 2012 housing report he authored. “Even if national indexes dip in the seasonally weak autumn and winter months, the declines probably won’t be big enough to erase the good second-quarter news on home values. This means the housing recovery may finally be coming out from the shadows.”
And don’t look now, but maybe the greatest indication of a housing rebound in progress is the increased sightings in recent months of the handyman-turned-rehabber and day-trader-turned-flipper. Both left for dead when the housing bubble burst in 2007, they have been resurrected, spotted prowling the streets for good deals.
Here are the key factors making this a great time to purchase a home:
A good place to start in laying out the case to buy a home is the rise in rents in most of the Top 100 markets (rent in places including San Francisco, for example, has soared 25 percent in the last 18 months). When it becomes cheaper to buy than to rent, owning becomes more attractive.
Rising Home Prices:
From the quarter ending in June 2012, housing prices rose 4.8 percent, according to the Freddie Mac House Price Index. And year-over-year numbers ending in June found that 34 states and the District of Columbia posted higher home values. Even so, housing prices are down some 30 percent from pre-recession highs, near 2003 prices.
Fewer Vacant Homes: Not only are prices bouncing back from their lows, but there are also fewer vacant homes for sale, according to quarterly Census Bureau data. Much of the stock of foreclosed homes has been absorbed by the market. And with the continued small number of new home starts, experts predict that the number of available homes will continue to shrink in the coming months.
Some financial experts believe that with the recent run-up of the stock market, housing is one of the only investments that is deflated and has a chance to bring a decent return. With the average rate on a 30-year fixed mortgage remaining in the 3.5- percent range—a record low rate in many ways—it’s like getting low-interest money to invest. The bonus is that you also get to live in your investment.
No one is predicting the boom years of the ’90s. But single-digit percentage increases each year add up quickly. And when it comes to watching your investment grow in value, a home purchase now just might afford you the best seat in the house.
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Senior Editor, EBONY Magazine