Buy now, before prices bottom out

Red home for sale sign on lawn

Home values are falling in most cities, and the National Association of Realtors predicts the median sales price will decline another 3.6% this year.

But if you put off buying a home until newspapers and television stations start reporting that the market has bottomed out, you'll have waited too long.

The managing partner of a big hedge fund recently wrote in the Wall Street Journal that its statistical analysis shows April was the turning point.

The most widely reported surveys are at least a month or two old by the time they're released, and that news will send lots of buyers just like you into the market.

Prices have already fallen enough to make homes more affordable in many places.

A study by Wells Fargo and the National Association of Homebuilders found families earning the median household income of $61,500 could afford 53.8% of all new and existing homes sold during the first three months of 2008, up from just 44% in early 2007.

Another big advantage you have right now is that so few borrowers are competing for so many homes -- even the best homes in the neighborhood.

Smart buyers can take advantage of that to land the home they really, really want, not just a great deal.

Trying to time any market is hard. Miss the bottom by even a little and you'll have to make compromises that you won't have to make today.

Even if you're able to buy when prices hit rock bottom and you pay $10,000 less than you would today, your payments would be only about $60 a month lower (on a 30-year, fixed-rate loan at 6%).

Buying a home isn't like investing in stocks and bonds. It isn't all about the money.

Is saving a few bucks worth the risk of being outbid for a home you'd love to live in for the next 10 or 15 years?

Or would you and your family be happier if you took advantage of the strong buyer's market that exists right now?

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