Housing Still a Good Bargain — For the Long Term

The S&P/Case-Shiller housing data for April was released yesterday, and as much as some optimists tried to spin the numbers as showing a slowing of the downward trend, the fact is that housing prices have yet to show signs of recovery. For home shoppers buying for the long term though, that should be no reason to be deterred. Lower prices along with low mortgage rates make this one of the most affordable times in years to buy a home.

About those numbers: because the trailing twelve-month decline in composite home pries was, at 18.12%, not a record decline, the positive spin was that the downward trend was slowing. However, home prices so far in 2009 are on track to decline 21.11%, which would exceed 2008’s loss of 18.60%. In short, signs of stability are not yet here.

That’s bad news for anyone looking to sell a home these days, and also for people looking to refinance if it puts their homes under water. However, long-term home buyers should be focused primarily on one thing: how affordable is the monthly mortgage payment? With home prices down and mortgage rates still near their historic lows, this is an especially good time to lock in an affordable mortgage payment.

Given how quickly the housing market and mortgage rates move, it’s best for home buyers that true signs of optimisim have not yet arrived. Once they do, prices and rates will be headed up.