Buying a home? Here are three things you need to know now
My best friend, a real estate agent, is convinced the unseasonably warm weather is behind the quickening pace of home sales in our area because home buying typically picks up when the weather warms up.
Or so the old saw goes.
"My voice mail got completely filled because too many people called wanting to go out shopping for houses!" she recently told me. "I’ve got more houses under contract in the past two months than I had all last year."
Because she’s my best friend, I had to call an economist to see if she was right.
Sam Khater, senior economist for CoreLogic, a Santa Ana, Calif., real estate data analytics firm that tracks repeat sales of the same homes over time, shot down my friend's early shopping theory.
"This has been a warm winter, and that’s impacted economic data, but the stability and slow and steady increase in home sales were happening before it warmed up," he says.
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The logical part of my brain knows it’s impossible to time any market, including real estate, but I still had to ask him: Is now the right time to buy a home if you want to get in at the bottom of the real estate market?
"Most people get the market timing wrong," Khater says, adding that the three most important facts about today's real estate market are these:
- Housing is extremely affordable.
- Depending on where you’re shopping, prices have dropped by a third.
- Mortgage rates are at historic lows.
"If you’re looking to buy and stay in your home for seven to nine years, now is a good time to buy," he says. "If you buy a home and prices fall 15%, you’re buying at a time when rates are low (and) you’re locking in a lower monthly payment."
And, if you can afford the higher payments of a 15-year or 20-year mortgage, you can get a lower interest rate and your equity will build up faster, creating a cushion against any future dips in home prices and a source of cash you can tap into down the line to fund your kid's college bills, a home remodeling or your retirement.