Why Buy a House now

The bottom of any market is hard to tell if you depend solely on the TV news or stock market charts. Housing is much different, and not as cynical, as the stock market in that housing in a tangible object- much like gold. The best way to tell if housing has hit bottom is to study the most recent trends in a given area (3 month period). If homes in a certain area continue to be boarded up and foreclosed, that area may well still be trending downward. Pay attention to the inventory of homes sold vs. the current supply for sale. If there is an overabundant supply of homes for sale it may indicate that the market is trending downward in that area. Conversely, if homes are selling within a minimal time on the market, prices will begin to rise in that area.

The answer to speculating home prices lies almost entirely with geographical location at this point in 2009. The United States is a big place with micro-economies complete with big cities, small states and vice versa, so no cable news, or any media for that matter, can broad scope the real estate market. States like California, Nevada, Florida and New York have seen prices swing in dramatic fashion, while states like Texas remained fairly stable over the long term.

Recessions so far in our economy have revolved roughly every seventeen years since the great depression and we’ve been a boom and bust economy almost ever since. Many of us experienced the last period of housing recession in the early 1990’s, some 17 years ago, which holds firm the revolving cycle of the diminishing and renewal of our market.

Today, the next generation of home owners will see and hear about the multitude of foreclosures and hardships, and will take advantage of lower prices as well as low interest rates. The current hosing slump is a result of easy financing that is now in the past. Lenders now expect prospective homeowners to bring their credit scores up and the number of their credit cards down. Right now, as of March 2009, the score to beat is 620 on average of the 3 major credit reporting agencies. This means make your payments on time and show fiscal responsibility. These new requirements also further strengthen property values by virtue of the fact that newer home owners will have a vested interest in the property along with the banks which decreases the likelihood of further debilitating foreclosures placing a burden on neighborhoods.

As far as buying now in 2009, with the $8000 direct tax credit for first time buyers (check in hand shortly after you close and file), 4.5% interest rates, and lowest home prices we’ll see from here to the foreseeable future, I put homes on “strong buy” status just like the stock callers did when UPS went public. Speculation will prove reality with the Government wanting to avoid an all out depression by propping up two things, housing and banking. With that much importance placed on those sectors it’s a no lose situation. This time around, instead of buying that 5 bedroom mini-mansion, we may start with the 3 bedroom home that costs less than the average income of a three year total combined amount.

It is safe to say that the government has created a situation that is begging, even paying people to buy a home. This creates a robust environment for housing, and in almost area of the country we will see stability in the short term, if not already. If the area in which you live has not yet hit bottom, stay tuned, it’s coming to a town near you.