Buyers: Why it's The Best Time to Buy a Home

I understand that some of you are probably waiting to buy a home, thinking that prices are going to keep falling. I don't blame you. So far, home prices have fallen an average of 7% this year. Next year, some experts are predicting the worst to happen, possibly with double digit depreciation. The media has been all over this, making it seem like the sky is falling. How wrong they are.

There are several things that these "experts" haven't taken into account. First, the bill that is currently in the Senate will do several things to help the housing market. It will increase the conforming loan limits in high-priced areas such as Los Angeles, Miami, New York, etc. to $500,000, making it easier for buyers to obtain a loan. This will apply not only to FHA, but also Fannie Mae and Freddie Mac, which are government-backed loans. Also, Fannie Mae and Freddie Mac are whom most lenders sell their conforming loans to so they can do more loans.

Second, Congress is trying to assist FHA in bailing out homeowners who's interest rates and payments are going to increase over the next year or two. This will ease the restrictions on FHA loans so that some of those borrowers with bad loans will be able to refinance and keep their home.

When (not if) these happen, it will take some of the pressure off of the banks so they can unload these loans and free up their cash reserves. President Bush has already stated that he will sign both of these bills, once they hit his desk.

These are the two main reasons that the housing "crisis" will not be as bad as the "experts" say it will be. So why is it the best time to buy?

Simple. Once those two things happen (not if, but when) the foreclosures will start to level off and possibly even drop. This will have a good impact on home prices as they will start to gain in value. Once this happens, buyers will flock to the market and the real estate market will stabilize. However your opportunity will have been lost.

Why will an opportunity be lost? Because, homesellers are offering incentives for you to buy now! Besides selling their home at a discounted price, sellers may also be willing to pay for closing costs, assisting with down payments, doing minor or major repairs that may be needed, offering carpet and paint allowance, etc. This can add up to $20,000, $30,000 or more (depending on your area)! If you wait until prices start to go back up, sellers may not want to offer those incentives since the market will have stabilized and homes start to appreciate.

This opportunity is only going to last a limited time. I would say through 2009. After that I think the market will start to go back up, along with home prices. So why wait?

Charles Tharp