Buying a Home in a Down Market

On its face, buying a home in a down market seems like a piece of cake. You just go in, make an offer and buy a home, right? Well, sometimes it is that easy but not always. We have been seeing headlines like Paulson: Housing 'at or near bottom', which can be very encouraging. If Paulson is correct, then buying a home now would be the perfect time. However, there are buyers who wonder if perhaps waiting a little bit longer would be the best bet, to get the absolute rock bottom price possible. This kind of gamble may pay off, but has the possiblity of really biting you as well. I recommend if you are thinking about buying that you talk to a real estate professional in your area to determine your strategy. Although large news companies like CNN report on the overall housing market, there are a wide range of market conditions across the country. I work as an agent in Tucson, Arizona, so my discussion will be directed at those considering the Tucson market.

Is Now a Wise Time to Buy?

In the Tucson area, it is a definite YES. Here's why. Our prices have dropped in many neighborhoods around Tucson and are now staying pretty stable. However, the inventory has not been depleted yet. So as a buyer you have many options available to you as well as many sellers who are, shall we say, "motivated". This is a great opportunity because historically, Tucson real estate increases in value at about 8-9% per year. Even if you only got half of that, you'd be doing pretty well if you lived in your home 3-5 years.

What if Prices Continue to Drop and the Value of my Home actually decreases?

That is an excellent question and one you should seriously consider. Although home values may drop slightly over the next few months, if the economy remains as strong as it is today they will begin to rise again in the near future. A home is a long term investment and should be held for a few years at the minimum in order to maximize your profits while still living in a home that fits your needs.

However, price should not be your only consideration when contemplating a home purchase. Interest rates also have a great impact on the affordability of a home. Overall, interest rates have been steadily rising over the past several months. They are projected to continue to rise at least through the end of 2007 and, according to industry experts, will most likely be at 7% within the next 6 months. In fact, rates have been flirting with the 7% mark recently so if they continue to rise as projected, they could be even higher than 7% at the end of the year. This means that a home that is affordable now may actually cost more per month if you wait until the fall/winter time to buy your home. A slight price drop may not improve the monthly payments if the interest rates rise at the same time.

Make Your Move

If you have the ability to buy a home in Tucson, Arizona, now would be a great time. I would love to discuss your individual situation with you and more fully explore the possibility of homeownership with you. While in general the market is favorable to buyers, I understand that each person has individual circumstances that affect his or her opportunities. My goal is to give you enough information for you to make your best decision. While this sometimes means that I work with someone over an extended period of time until they are ready to buy, I believe my duty is first and foremost to work in your best interest.

You can contact me at (520) 481-3695 or on the web at www.TucsonExpertAgent.com or Robin.Willis@azmoves.com. I look forward to hearing from you.