Pending Increase in Home Sales Time to Stick your Toe Back into Real Estate

When the housing bubble was growing, people were investing in real estate in hopes to resell the property and turn a profit. Shows such as “Flip this House” featured such endeavors. Towards the end of its final season, and the boom in housing market, showed the negatives of buying real estate as a financial investment. However, in the severe recession facing today’s economy, the housing market has reached an incredible low in property costs and it seems that now would be a perfect time to buy.

It should be noted, that the economy is doing poorly because many people could not keep up with payments on the properties in question. It should also be noted that many foreclosures are the result of bad loans and unfixed interest rates that spiked when banks called in these toxic loans. The past mistakes of many American home-owners could prove to be valuable lessons to future homeowners. For example, it would not be wise to buy property at the height of a real estate bubble since prices have no room to move but downwards. In later episodes of house-flipping television series, people were purchasing homes for close to $1 million when the property was blatantly worth much less and a profit was not realistic.

With the prices of real estate down considerably from last year, those who can afford to buy property should do so. Especially if one has good credit, obtaining a loan might be a challenge since most banks have tightened up on lending, but the odds are considerably higher. Since prices are down so much, as with the height of the bubble, they have no place to go but upwards. However, take a lesson from past buyers and look for a fixed rate loan. This ensures that banks will be unable to increase the interest rate if they decide to call in the loan if times get worse.

Taking advantage of the housing crisis should be done wisely. It would be beneficial to purchase property that costs below actual value, something that shouldn’t be difficult. It is also important to have an inspector and an appraiser check out the home in order to make sure there is no severe structural problems that can be financially extreme later on, and to make sure you’re not paying more than what the property is really worth. As Rahm Emanuel, President Obama’s Chief of Staff, “Never let a Crisis go to waste”.

In economics 101, in regard to the stock market, it is said to “buy low, sell high”. With that in mind, not only would it be patriotic to invest in the economy, it would be financially sound to do so now. When the market tanks, it has nowhere to move but back up. That is the nature of the capitalist markets. Home buying goes hand in hand with that mentality. It was the housing market that caused the recession and it will be the housing market that will help get the economy back up. To take advantage now will put you on the upwards path as the country rebuilds its capital.