Looking back 10 years

10 years ago we were all younger and more energetic. You could have never imagined today you would be so different from the person that you thought yourself to be a decade’s ago. Plans change, chance events materialized, and instinctual decisions interestingly turned out to be right on. That’s the unpredictable journey of life.

As rising home sales and increasing home prices begin to climb in the third and last quarter of 2008, many folks might regret not buying when good opportunities and interest rates were common. Contact your “local” Realtor and ask him or her if the market you are in indicates a good time to buy.

Under the Economic Stimulas Act of 2008, FHA and conforming loan limits are set at 125% of area median home prices as determined by HUD. 

Higher loans limits should draw many “move-up” buyers into the market since they will be able to get better loan terms.

If you have been looking to move up into a larger or nicer home, now is the time to do so.  Loan limit increases, asking price decreases, willing lenders, and the potential for bargains in negotiations makes it a great time to buy or buy up. 

The housing slowdown isn’t being felt in some areas around the country.

For example, in some California areas the housing supply limited.

Other metropolitan areas continued to post gains in home prices nearly every month are Seattle, Portland, OR, and Charlotte, NC. In Charlotte, home price growth has averaged around 7 percent over the last five years. In San Francisco prices have declined a little, but demand still remains very strong.

Real Estate markets vary considerably by region and state, but can vary by county or locality. South East Pennsylvania has fared better than many other areas and states.

Although real estate has always been a good investment, consult your Realtor or agent on local market conditions before deciding to buy or sell. They, especially more so then the national media, are the most qualified to provide realistic real estate conditions.

There is a good reason to buy now instead of waiting for prices to come down.
Consider a typical home that sells for around $219,000. For example, you put down 20% and get a 30 year fixed rate mortgage at today’s rate of 5.5%. With that, monthly principal and interest payments would come to around $995.

So let’s say that 12 months from now the same home sells for 10% less or around $197,000. But by then the recession is over and the Fed starts jacking up interest rates to slow any inflation. Mortgage costs rising just one-half percent, to say 6% or a little more, your monthly payments will actually be similar or even a higher. The same home monthly payments might cost closer to $1,000 per month. In this case, you would not have saved anything.

And to make it more difficult, homes prices would have steadied and sellers will be less willing to negotiate, making any bargains harder to come by. In the mean time, you would have lived in a place you are not happy with.

Housing risks always seem more severe when headlines give indications otherwise, but this is actually the best time to think investing in a home long term.

The Federal Reserve’s recent rate cutting moves are not lowering mortgage rates for new buyers, as much as they helping those who hold existing adjustable rate mortgages.

In addition, rates on home equity lines, credit cards, and many auto loans have all dropped significantly. Many homeowners now will not face higher rates as their adjustable-rate mortgages reset, helping alleviate some of the recent foreclosure problems.

New applicants for mortgages are likely to continue to pay more then would be expected. Mortgage rates usually follow the 10 year US Treasury rates, and have traditionally traded just below 2 percent above 10-year treasury yields. Treasury’s currently yield about 3.45 percent. However, investors including pension funds, insurance companies, and bond mutual funds are demanding a greater premium these days for mortgages over the usually less risky U.S. Treasury bonds.

Good advice for buyers seeking mortgages is to shop around. All mortgages are not alike, and mortgage rates are still at historically low rates.

Now is the best time for those buyers who have been sitting on the fence to make their move into homeownership or for those who want to buy up into larger homes.