The housing market: Good news or bad news?
October 18, 2011
Bad news about the housing market may be keeping potential buyers away, and that's a shame. It is important to know that in financial matters, bad news and opportunity often come at the same time.
In fact, from a potential buyer's standpoint, the news about the housing market is not really all that bad. Here are three ways a buyer should look at the news about housing:
- Current mortgage rates are at record lows. By the end of September, 30-year mortgage rates had reached 4.01 percent, and 15-year rates were at 3.28 percent. Amid all the bad news about the economy, not enough emphasis is being placed on the fact that current mortgage rates aren't just breaking records, they are smashing them. This is an extraordinary opportunity for anyone in a position to buy a house or refinance a mortgage.
- Housing prices are out of free-fall. You may continue to see stories about falling home prices, but it is nothing like the free-fall experienced in 2008 and 2009. Standard and Poors compiles a widely-followed composite of 20 major housing markets, as part of the S&P/Case Shiller Home Price Indices. Based on this index, double-digit year-over-year declines were commonplace back in 2008 and 2009. In contrast, for well over a year now the year-over-year changes have been a mixed bag of low single-digit increases and decreases.
- Ugly is in the eye of the beholder. Home price trends are less ugly than they were a couple years ago, but then again, what you find ugly depends on your perspective. Certainly, if you own a home and are looking to sell or refinance, then falling home prices can be a problem. If you are staying in your home for the long term, and are all set with your mortgage, then you should be fairly indifferent to falling prices. If you are looking to buy, then falling home prices is like having real estate go on sale.
In short, if you are in a position to buy, don't fear the housing market. The news might get better, but the opportunity may never be this good again.
