10 Reasons to Buy Now

10 Reasons to Consider Buying a Home Now

For the first time in a long time, buyers are in the
driver’s seat. At least for now, in most markets, you can get a great
value on a home. But this favorable market may not last forever and
if you intend to buy a home, now may be the best time to enter the
real estate market.


1. Increased Jumbo Loan Limits Are Set to Expire on
December 31, 2008.
The recent increase of the jumbo loan limits
by the government is helping add favorable terms into the marketplace
which translates into easier qualifying and affordability for buyers. But
those increased jumbo loan limits won’t last forever and are set to
expire on December 31, 2008. While the new loan limits vary across
Utah, they are now $431,250 in Wasatch County and the national
maximum of $729,750 in Salt Lake County, Tooele County and Summit
County. The rest of the state has risen to $417,000.

2. Despite fluctuations, current financing rates are
allowing you to get more for your money—but it won’t
last forever.
An increase in interest rates, even by just a quarter
of a percent, will decrease affordability of homes; so much so that you
may not be able to afford the home that you want today and you may
have to purchase less than you might want or need.

3. Real estate is a strong, long term investment.
Many buyers are concerned about falling prices and the possibility of paying
too much for their home. But it must be remembered that real estate
is not the stock market and the purchase decision should be made for
the long term. Since record keeping began in 1968 by NAR, the national
median existing-home price rose every year through 2006, even during
recessions and periods of sales decline. Typically, in a balanced market,
home values rise at the general rate of inflation plus 1.7 percentage
points, according to NAR.

4. In order to build wealth, you should consider having
real estate in your investment portfolio.
Many people choose to invest their money in the stock market. And while stocks
can be a lucrative way to improve your financial situation, there is
another, arguably better, method. Stability is key to building wealth
and stocks, in most cases, don’t compare with the stability of real
estate. When you purchase real estate as an investment you can
potentially get more for your money.

5. Today’s market may offer a particularly good
opportunity to buy investment properties.
While the recent slowdown in the housing market has softened prices for home
sellers, it has also resulted in an unusually good opportunity to buy
rentals and other investment properties. Inventories of homes for
sale have climbed steadily over the past two years, which has put
downward pressure on prices. In particular, the large number of bank-
owned properties, has resulted in an increased inventory.
Banks are not in the real estate business and are usually anxious to
get the properties off their books. As a result, many properties that
are bank owned are selling at discounted prices.

6. The potential benefits of real estate as compared to
stock.
With stocks, $200,000 will buy you exactly $200,000 worth
of stocks, no more, no less. However with real estate, that same
$200,000 can, if you qualify for the necessary financing, enable you to
buy a home that is priced at approximately $1,000,000. If both of these
investments increase in value by 10% you will have only a 10% return
on your stock money and a 50% return on the money you invested
in real estate, less any costs and expenses of real property ownership.

7. There are a lot of homes to choose from right now.
The large supply of homes on the market clearly favors buyers and it
should take several months to draw the inventory down. Regardless
of price range, in most markets, there are plenty of houses from which
to choose. There’s a great selection of homes, condos and
townhouses. You have many options. When resale inventories are
low, buyers are forced to make compromises.

8. Homes are among their most affordable since 2004.
Home prices have dropped so quickly and so far that, valuations—the
differences between what a home should cost and its actual prices—
are the lowest they’ve been since 2004, according to March 5, 2008
CNN article entitled Housing: Best time to buy in four years. The article
said, “The Cleveland-based bank National City Corp, together with
financial analysis firm Global Insight, revealed Tuesday that more than
88% of the 330 housing markets surveyed showed price declines and
improved affordability during the last three months of 2007.” The
article went on to report a quote from National City’s chief economist,
Richard DeKaser, noting “Housing valuations are almost back to long-
term norms.” He called current affordability “the best in the past four
years.”

9. Inflation may be on the horizon.
All of the bad news has hit all sectors of our economy—from falling home prices, rising
food and energy prices, the credit crunch and a deteriorating labor
market. According to Realty Times’ June 25, 2008 article entitled Realty
Viewpoint: More Signs Housing Nearing Bottom, “Home prices have
receded while consumer prices for food and gas have doubled since
2004.” The article went on to report that, “The stock market has
lost trillions in gains. The DOW has dropped from over 14,000 points
to below 12,000 for the first time since 2006. The only thing that isn’t
down is unemployment, up to 5.5 percent from 4.5 percent this year.”
If history is any indicator, with this news comes the likelihood that the
Fed will look to increase interest rates as a way of combating the
inflation pressures.


10. The market may be changing!
Lawrence Yun, Chief Economist of the National Association of Realtors, recently spoke to a group of
Realtors in Park City noting, “Even though Utah is already fundamentally
healthier than many other real estate markets, improved economic
conditions for the U.S. in the second half of the year should continue
to help housing in the Beehive State as more people choose to move
here.”
In fact, Yun told the group that he expects prices will be higher in 99
percent of U.S. markets five years from now, which is why he emphasized
to the group that it’s important to make buying decisions based on
long-term trends, not short-term ones. “In the Rocky Mountain area,
for example, prices could rise 30 percent in five years,” Yun said.
“The long-term prospect is very bright for the Rock Mountain states,”
he said. “Given that currently it’s a buyer’s market—high inventory,
historically low rates—it may be a good time to enter the marketplace.”
A second report released by the Utah Association of Realtors on June
21, 2008 noted that “Home and condo sales along Utah’s Wasatch
Front were up for the fourth straight month in May, more good news
for a state that has consistently outperformed the nation in the housing
market arena.” The article went on to report, “In May, single family
home and condo sales along the Wasatch Front—including Salt Lake,
Utah, Davis and Weber counties—were up 4 percent compared to
April, according to statistics from the Utah Association of Realtors.
In fact, home and condo sales have been increasing every month since
the beginning of the year and were up a whopping 59 percent since
January.”



Locally, consider these figures supplied by the Utah Association of
Realtors:
• Over the next few years, Utah’s population is estimated to grow by
about 200,000 people—up from 2.7 million residents in 2007 to 2.9
million by 2010—according to the Utah Population Estimates Committee.
• For this next year alone, Utah is expected to add 142,000 new people,
a figure that translates into about 46,100 new households being formed
over the next years. In other words, the state will need about 46,100
new housing units in the next couple years to house these additional
people.


If you are ready to learn more about the opportunities in today’s housing market, please contact me today. I am a
professional Realtor® who can help! If you need to sell your home—even if you have to discount
it based on the current marketplace—together we can look at your position to determine the best steps based on today’s market conditions.
Heidi Alldredge
801-494-7008