March 4th, 2012 9:26 AM by Christopher Terry
If you have been paying any attention to real estate you probably have heard the realtor slogan "Now's the Time to Buy". But the question is "Is it really?" The slogan has been pushed for more than 2+ years and personally I believe that homeownership is the fastest path to wealth and prosperity for most of us. (See previous blog post of a 10 year comparison of home prices in Fall River.) But back to the BIG question: Is Now Really the Time to Buy?
Let's look at where we are in this latest real estate cycle:
Based on this graph it's possible that we could be past the point of maximum financial opportunity. This is probably why 31% of all sales nationally are buyers putting down more than 20%. Most of these buyers are investors looking to capitalize on current market conditions. (See my Blog post: Warren Buffet Says Buy Now!) Don't worry, opportunity has not passed you by, after all most homebuyers do not make large financial decisions during the "Despondency/Depression" stage of the cycle.
Basic law of supply and demand. More Inventory/Fewer Buyers = Low Prices. Lower Inventory/More Buyers = Higher Prices. Looks like we are headed toward the reduced inventory stage of the cycle. Combine that with low interest rates and an improved economy and price appreciation should follow.
The forecast for the next 2 years indicates increase in inventory as the economy improves with more home starts, more home sales as more buyers enter the market and home price appreciation. Interest rates are expected to remain steady although raising to near 5% in 2013.
Can you guess the bottom? Probably not, neither can I. However blue chip economic indicators from January 2012 indicated that there is a 75.6% chance that property values will bottom in 2012.
So, back to the BIG question: Is now the time to buy? If you have been on the fence waiting for the bottom looks like economic indicators say YES. But only you can answer that question.
I can tell you from my point of view: "The futures so bright, I've gotta wear shades!"