The National Association of Realtors’ Affordability Index indicates homes are more affordable now than at any time in recorded history. Yet many prospective buyers remain on the sideline with fears and concerns about national and global economic uncertainty.
“It’s understandable for people to be skeptical about housing after the economic uncertainty of the past few years,” stated Quicken Loans Chief Economist, Bob Walters. “But history teaches us that the best time to buy is when we are most afraid and pessimistic.” As Warren Buffett puts it, “Be fearful when others are greedy and be greedy when others are fearful.”
Six key variables for qualified buyers to consider are:
- Irrational Fears – It’s important for qualified buyers to rationally seek financial and real estate advice from a professional and examine the true basis for their reluctance to enter the market.
- Historic Low Interest Rates—Today’s rates magnify buying power and future asset appreciation potential. FHA loans are typically assumable, creating a possible selling advantage when market rates increase.
- Buyer’s Market—Buyers have maximum leverage in a buyer’s market. In some recovering markets with lower housing inventories buyers are already competing in multiple-offer transactions.
- Low Cost Mortgages—Otherwise-qualified buyers who cannot afford high down payments have the option of FHA insured financing with lower down payment requirements.
- Rising Rents—Home prices have decreased by 50 percent in some markets– making a house payment more affordable than escalating rents.
- Ease of Access to Information—Mobile apps now mean that while driving the neighborhood, prospects can access prices and get a real-time quote of estimated monthly mortgage payments to purchase their dream home.
Qualified buyers in most markets have a major advantage at the closing table now, which makes this a strategically important time to evaluate future housing options.
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