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March 17, 2009
Six Reasons to Purchase a Home in 2009
1. Real Estate cycles typically last ten years. The most recent bottom of the market years were 1960, 1970, 1980 and 1990. The last market upswing began in 1998, and hit its peak in 2005- just seven years into the cycle. Given the state of our current cycle, the market should have bottomed-out and should be on its way to a more normal market. The NAR (National Association of Realtors) has reported increases in home sales from November to December of six point three percent. From December 2007 to December 2008, an overall increase of two point one percent was seen. These numbers reflect a modest rebound of the market.
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2) Increased affordability and pent-up demand - Agents across the country are reporting that they have prospective buyers who continue to wait for home prices to stabilize before they decide to sell or buy a home. With the conclusion of the Presidential election and the new administration in place, the stock market appears to be stabilizing bit by bit. The government has programs in place to assist both banks and buyers with home purchases, and there are many buyers out there who are ready to make that purchase. Open houses are seeing increased traffic. NAR's Housing Affordability Index increased ten point nine percent in the month of December alone to a level of one fifty eight point eight - the highest level on record. The Housing Affordability Index illustrates the relationship between housing prices, current mortgage rates, and household income. The current level is the most positive since tracking this relationship began back in 1970.
3) Easing credit crunch. Current interest rates are low. Funds are becoming more readily available. Savvy buyers know that excellent credit scores coupled with substantial down payments bring the best mortgages. Additional mortgage assistance is on its way. The combination of decreased home values and the current government bailout will enable more people to qualify for home loans than in the past ten years.
4) "Days on the market" and inventory levels declining. These numbers reflect the basics of supply and demand in the housing market. Housing pricing stabilization is seen when market conditions reflect a 6-8 month supply of inventory. Based on market trends of the fourth quarter of 2008, a national average of 8.8 month's worth of inventory for this year can be expected.
5) Demographic Data- People in this country continue to live their lives, get married, have families, relocate and pass away. Having said this, these life-changing situations often involve the need to buy or sell a home. In 2008, the numbers of people who make up Generation Y; people born from 1977 to 1994, outnumbered those of the baby boomer generation. Members of Generation Y are beginning to enter their 30's, marking the time when a lot of them will be looking to purchase their first homes. Members of the Baby boomers are just at the point where they may be looking to purchase a second or retirement home. Currently, new home developments have decreased, resulting in decreased supply. An increase in demand for these homes will result in higher prices.
6) Available Tax Incentives. The Federal Government will give an $8000 credit to any person who has not purchased a home within the last three years. Currently in negotiations in the House and Senate, this bill would allow buyers who make a purchase within one year of the bill's enactment to deduct $8000 from their Federal income taxes.
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