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Yes, Now Is A Great Time To Buy Your
First Home
If you’re looking to
buy your first home and haven’t been following the housing market
closely, you may be under the impression that it’s a terrible time to
buy.
On the contrary, it’s
a very good time to buy.
With downward
pressure on home prices, a large inventory to choose from, motivated
sellers, and excellent interest rates, now may be the best time to buy a
home—especially if you’re a
first-time homebuyer.
After the seemingly
out of control rise in prices between 2003 and 2006, home prices have
dropped—quite dramatically in some areas. As little as a year ago, home
prices were out of reach of many potential first-time buyers, but now
prices are beginning to return to pre-boom levels or close to it.
According to the National Association of Realtors®, the First-Time
Homebuyers Affordability Index—which measures a first-time buyer’s
ability to afford a typical home and mortgage—is at the highest point
it’s been in over four years.
Inventory levels are
also favoring buyers. With a large number of homes on the market, buyers
have more options to choose from in terms of size, condition, location,
etc. This glut of homes for sale is especially beneficial to first-time
buyers because more homes on the market equal more affordable
homes on the market. Three years ago, affordable housing was scarce, but
we’re now starting to see more lower-priced homes available.
High inventory often
means more motivated sellers as well. With the current market
conditions, sellers are much more open to negotiation in order to get
their homes sold. Savvy buyers can negotiate a lower price or have
closing cost paid for if they play their cards right. Also, first-time
buyers have an edge because they can make a contingent-free offer to the
seller. In other words, their offer to buy isn’t dependant on the sale
of their current home because, naturally, a first-time homebuyer doesn’t
already own a home.
Finally, now is a
very good time to buy because interest rates are low. Currently, rates
on a 30-year fixed rate mortgage are hovering right around the 6.0
percent mark and have actually been below that for much of 2008. In
comparison, rates were as high as 6.6 percent in the 3rd quarter of 2007
and didn’t dip below the 6.0 percent mark at all last year. However,
keep in mind that you’ll need to have good credit to take advantage of
these low rates.
Put together, all of
these factors create a perfect storm—a good perfect storm—for
first-time homebuyers. Pricing, availability, and affordability all
favor buyers and first-time homebuyers in particular. So if you’re
wondering if now is the time to buy your first home, wonder no more.
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