by Kathryn Rinaldi
The American housing market is either in the doldrums or in the beginning stages of a solid recovery, depending on who you choose to listen to. When the housing bubble of the early 21st century began deflating mid-decade, no one expected the severe economic aftermath we have been dealing with over the last few years, but the silver lining of the housing collapse has never been more prominent than now.
The Current Climate
Mortgage interest rates are at all-time lows, and the United States Federal Reserve System (the Fed) has vowed to do everything in its power to keep them that way. Various reports from real estate analysts and financial news media outlets indicate that the slide in home prices has finally reached a bottom, despite an ominous backlog of pending foreclosures. There seems to be an uptick in real estate sales activity, at least in some regions, and construction crews in some areas of the country are busy erecting new houses.
The Right Time?
With the above in mind, the bottom line for consumers seems to be the perennial real estate question: Is it time to buy a house now? Real estate agents will more than likely always provide a wishy-washy answer, but there are quite a few arguments in favor of acquiring a home right now, although the ultimate decision depends on the financial means and goals of each prospective buyer.
A common theory behind the housing collapse is that it was precipitated by an economic perfect storm. The opposite can be said of housing right now, at least in the sense that several factors have combined in certain regions to create great buying opportunities. Imagine buying a condo in trendy Miami Beach for $150,000 with 20 percent down payment and a 15-year fixed interest mortgage at 3.10 percent annual percentage rate (APR). Assuming that you meet today's strict credit requirements and have the financial means and solid work history to qualify, you would pay the bank about $850 per month and your condo would be free and clear before the year 2030.
Real estate investors look for opportune points of entry to the housing market and develop exit strategies. Prospective home buyers should not apply this hurried philosophy; instead, they should be acquiring a new home with the intent of living in it for at least five years. One of the issues that prompted the bursting of the housing bubble was boundless speculation and the lack of financial planning. If you are going to buy a home, do it now to take advantage of pricing and favorable loan terms, but don't worry about fluctuations in real estate values for the next five years.
Kathryn Rinaldi is a freelance blogger who writes about real estate. If you are looking to buy a home, you may want to visit personalhomeloanmortgages.com to find the best mortgage rate available to you for your credit history and loan type.