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Housing market: Is opportunity knocking? | Tricia Ackerman
To quote Warren Buffett: "A simple rule dictates my buying. Be fearful when others are greedy, and be greedy when others are fearful."
While Mr. Buffett was writing about buying stocks, the same can be said for housing today.
As quoted by S&P Case-Shiller Home Prices Indices: "Housing issues have permeated the economy both locally and nationally."
One index that tracks housing prices, S&P Case-Shiller Home Price Indices, indicated home values fell the most since 1968, declining 18.5 percent in December from the year before.
Looked at from a different perspective, this means home prices have fallen to levels not seen in six to 12 years, depending on individual markets. Following the Case-Schiller report was the recent report from the National Association of Realtors (NAR): Home prices for the month of January fell by 14.8 percent.
The bright spot, in contrast, was that the number of homes sold in December increased. Home buyers from coast to coast have been buying distressed properties at the rate of 45 percent of total sales.
Seasoned real-estate investor Bruce Norris, head of an investment group in Southern California, expects to purchase at least 100 homes this year, saying "This is the buying opportunity of our lifetime." New homes or homes under construction are near all-time lows. The country's demographics point to more potential buyers coming into the housing market than projected inventory in coming years. This all points to higher prices on the horizon as demand will be greater than supply. This is supported by the fact that the inventory of unsold homes fell 2.5 percent in January, he said.
Three important reasons to buy now:
• Interest rates are near all-time lows.
• Home prices have declined to levels not seen in years.
• Qualified first-time home buyers are now eligible for up to an $8,000 tax credit.
Lower prices don't always equate to lower payments. One final point to consider. Even if you believe that home prices will continue to decline, it's very difficult to believe that interest rates will remain at these low levels.
Did you know that even if home prices were to decline 10 percent while during that time, interest rates available for home loans were to increase by 1 percent, your monthly principal and interest payment would actually be higher?
So, if you are thinking of buying, or the end of your lease is near, get busy and get in the game. To quote Mr. Buffett: "If you wait for the robins, spring will be over."
Tricia Ackerman is an agent with Prudential Northwest Realty in Federal Way: TriciaAckerman@pnwrealty.com or www.triciaackerman.com