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America's home ownership rate is at the lowest level since 1998.
Homeownership is falling at the lowest level in decades, despite the fact that home prices have fallen, affordability has improved and inventories of new and existing homes are still running high. Bargains are everywhere, but few are interested or eligible to take advantage of the great real estate deals. Home values are expected to continue to slide as inventories pile up, and likely won't recover until the job market improves.
More or less-jobs
In 2010, we saw steady, gradual increases in jobs across some sectors, in 2011 we expect there to be slow steady growth in hiring again.
Economic recovery from the unemployment bottom levels will take years until there is a period of continuous increase in the number of jobs created. Unemployment is still unacceptably high and progress just can't get here fast enough. The current economic recovery has been very slow to generate new jobs. Unless job growth picks up and more of the 14 million officially unemployed — and the millions more who dropped out of the labor force in recent years — get back on their feet, the power of consumer spending may fizzle.
Are we there Yet?
Calculating for the absolute bottom to hit before buying puts you at risk of missing it and getting caught up in a market on the upswing. Plus, for some first-time home buyers, owning simply makes better economic sense than renting. In some parts of the country, there's no real reason to get cold feet about buying. Prices have ticked up slowly and are expected to continue that slow march for the foreseeable future. There are plenty of markets in Texas, Kansas, Arkansas, Oklahoma and the Midwest that are now starting to tick up. In these areas, this might be a great time to buy, with interest rates historically low, a fairly large inventory of properties to choose from and less chance of getting caught up in a bidding war. There will always be some people who need to move because of job relocations, expanding families or a need for better schools. In desirable neighborhoods, there's a price to pay for waiting. You have to ask yourself, How greedy do I need to be? If the price goes down much more, you've got other people trying to buy it, even if it's not the absolute bottom. Then, you might end up in a bidding war, erasing the savings you thought you had achieved by waiting.
What about now?
There are some people who are better off waiting in this market: people who bought their current home in the past couple of years. In this short period of time, the value of the home hasn't gone up enough to compensate for the agent's commission and other selling costs. These days, five years seems to be the number when it comes to buying and selling: If you've been in your house five years and plan to move to a place where you will stay at least another five. However, there are a few notable exceptions. There are some markets around the country where prices are still sliding, jobs are being lost and foreclosures are making it hard for people to sell their homes, such as economically depressed Cincinnati and Cleveland. There is still too much uncertainty in boom-and-bust markets such as Phoenix, Los Angeles, San Diego, Atlanta or Tampa.
OK, I'm ready now
If you're ready to buy, try to make the best deal you can in a neighborhood that is holding its own. When you are looking at a neighborhood, work with an knowledgeable agent to go over the basics: How much inventory is there? How many listings are foreclosures? How have prices in that neighborhood fared historically and over the past few years? This will give you a feel for the overall direction of the neighborhood. If there are a lot of foreclosures still popping up, prices might fall further than you would like in the short term. That may not be an issue if you plan to stay put for a while, but it could limit your options if you need to sell or refinance your mortgage.
Better opportunities?
Even though the latest housing headlines are far from encouraging, home prices are down and new-home sales are at record lows. This dismal news has many buyers sitting on the sidelines, afraid to make a move. But, economists say, waiting for the bottom may not be the best strategy. Calculating the market bottom is a difficult task, and it's most often spotted in the rear-view mirror. For one thing, no one knows when the U.S. real-estate market will officially hit bottom. Prices in many markets have not yet hit their lowest point, but they aren't that far off. And in other areas, only the pace of sales has been affected; prices have held firm or gone up. For many buyers, there's no real need to wait for the market bottom to out, what constitutes the bottom for the country is meaningless for those looking to buy and sell homes in their own neighborhoods.
The housing bottom may be reached within the next year, and possibly years, before prices significantly come back. Declining home values and low interest rates can add a lot of value for new buyers today. The tax savings and equity build-up are typically a primary source of financial freedom for many homeowners, but buying at the bottom of the market might help you secure your future.
Courtesy of: Accent Home Loans |
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