Is It Really A Good Time To Buy A Home

Is is now the best time to buy your first home? a look at today's housing market and my prediction for a bottom in the market.

If you listen to all the hype from NAR and those who make their living selling houses, today's buyers market is the best in history. Is it really the best buyers market in history? Well, maybe; but is it the best time to buy? This is a different question and may have a different answer.

The real question is, can you get the best possible deal if you buy now? Realty trac the primary tracking agency of the real estate market, predicts that the already devastated US housing market will see another 1.2 million foreclosures in 2011. This would indicate that home prices in most of the country are not yet at the long anticipated bottom.

Does this mean that the first time home buyer should wait for at least another year to buy? maybe, but not necessarily. There is another factor that could play into the decision. Mortgage rates could possibly rise offsetting the difference in the price you pay for your home now verses how much prices may fall before we reach a bottom in the market.

According to the top analyst at Bankrate.com the current average 30 yr fixed rate mortgage stands at 4.81% and If the economy continues to improve, we will likely see rates rise to the mid 5% mark in the next year.

So how does all this add up to a decision for a possible buyer? The general concensess  is that the economy will continue to improve. I personally agree with that mindset and believe that mortgage rates will rise but for a different reason. Its a fact of history that during times of inflation which de-values the dollar, rates do rise. And I believe we will see inflation.

However with 1.2 million foreclosures looming for this year adding even more inventory to the already flooded market, I believe that home prices in most area's will fall as much as another 10%. Of course you will need to make any decision on buying a home based on the facts in your particular market, But it is my opinion that as long as rates stay below 6% you will get the best deal by waiting until the market stabilizes, which should be in late 2012.

Why I believe the market will bottom in 2012.

I've come to the conclusion that mid 2012 will see the bottom of home prices in most of the US through a simple observation of 2 factors. Those factors are the outlook for the economy as a whole and the inventory of homes on the market.

Even though employment numbers haven't been very promising as of yet. Most indicators point toward a recovery in process. The state of the economy and the housing market for the last three years has kept a huge number of investors and would be repeat home buyers on the side lines and during that three years over 6 million marriages took place. Which ads millions more first time buyers to the already backed up demand for housing.

While the unsold home inventory is at an all time high, so is the backed up demand. I believe the recovering economy will soon cause a freeing up of the mortgage market. Coupled with the lowest prices in many many years, this will send buyers pouring into the market at record levels and shrink unsold inventory faster than most people think.

While most area's may not see appreciation for another 3 years I believe home prices will stabilize in mid 2012. This will be the ultimate time to buy a home.