I get the frequent question from buyers that I meet, particularly those that I meet at open houses,on where our market is at; has it reached the bottom?  My response is that no one knows but that there is plenty of data to pull for specific neighborhoods to see how those micro-markets are performing.

Details I look for include: what is the average days on market for properties to sell (this is where accurate pricing comes into play-price it too high & it lingers), at what price point is there the most sales activity, & what is the absorption rate (AR is how long it will take for the current inventory to sell.)  Six months of inventory indicates a balanced market, more than 6 months indicates a buyer’s market, less than indicates a sellers market.

Right now, we have that perfect combination of historically low interest rates (predicted by some to go as low as 4.2% by years end), fewer qualified buyers, price softening and more inventory.

If you’re in the fortunate position of having job stability, a down payment, can make a 4-7 year commitment to owning a property and the dream to get into a property, then now is your time!  It makes even more sense when owning a house is equivalent to paying monthly rent.  Currently, the majority of my clients are first time buyers who had been priced out of the market but are now able to get in for the above mentioned reasons.

Read on for interesting points made in this recent WSJ article.

Link to full article at Wall St. Journal

By DAVE KANSAS

Some people think it’s a good time to buy a house. Is it?

In the past few weeks, home-sales data have perked up from very low levels. At the same time, home prices continue to fall in most parts of the country and mortgage rates, while ticking up, are at remarkably low levels.

All these data raise an intriguing question: Is now a good time to purchase a home?

It’s important to address the salient caveats. First, we are extremely unlikely to return to the boom-boom era of home investing reached earlier in this decade when prices soared 20% and more per year. Long-run historical data indicate that homes generally match the inflationary trend, rising about 3% a year.

Buy Carefully

Second, this is not the time to take aggressive action. Borrowing too much or utilizing gimmicky mortgages are what got too many people into trouble in recent years. Investing in a home, like investing in the stock market, should be approached prudently. You should be prepared to put at least 20% down and your budget should account for monthly mortgage and principle payments.

The importance of the down payment is that it gives you an equity “buffer” in case home prices should continue to decline after your purchase, which may be the case in many communities this year.

One reason to think seriously about a home purchase is the mild revival in real-estate data. According to the National Association of Realtors, new-home sales rose 5.1% in February. The Commerce Department reported that new-home sales gained 4.7% in the same period.

The pop in sales activity, which is coming from very low levels and remains fairly weak, is being driven in large part by falling prices. The Case-Shiller Home Price Index for January fell 19% year-over-year. The Commerce Department reported similar drops for new-home sale prices.

The fall in prices and the rise in sales activity is a good thing. It shows that buyers and sellers are starting to agree more and more often on a price. When prices start declining, sellers will hesitate, hoping that the market will rebound. This hesitation has evaporated as prices have continued to fall. The uptick in sales amid falling prices shows that the market is beginning to work once again, which is usually an early indication that a bottom in prices is starting to form.

Don’t Hunt for the Bottom

Some prospective homebuyers naturally want to know when prices will actually hit bottom. Pinpointing a bottom in home prices, however, is very difficult, akin to picking the bottom in the stock market. But data and research indicate we’re getting close.

A recent report from Banc of America Securities-Merrill Lynch argues that the housing market could start to demonstrate modest growth and improvement later this year. This forecast relies on long-term mortgage rates continuing to decline. It also notes that a weak job market will hamper growth in housing.

Mortgage rates are a key element to buying a home since lower rates make it cheaper to finance your home purchase. Last week, Freddie Mac 30-year mortgage rates ticked up to 4.87%. Merrill Lynch predicts that the Federal Reserve, through the purchase of long-term Treasurys and other tactics, will drive 30-year mortgage rates to 4.2% by year end.

If you believe now is a good time to buy a home and your lifestyle and budget support such a choice, there are a few strategies to consider in order to get the best price.

Know what you want. This requires doing the requisite amount of research so you know exactly what you want and what you can afford. Once that’s done, being ready to buy quickly can help you drive a good hard bargain.

Be ready to pounce. Cash, of course, is king. If you can write a check for a home, you can drive a very tough bargain in a world of eager sellers. Not everyone has that kind of kitty, so the next best thing is having a pre-approved mortgage. Many sellers are looking to close a deal smoothly and quickly, so having everything lined up ahead of time can strengthen your negotiating position.

Negotiate closing costs. Having the seller handle all closing costs can knock a bit off the sale price. It’s a buyer’s market; fight for this.

Get an inspection. And make the sale contingent on what you learn. Then renegotiate to lower the price. At the least, make sure that the seller is responsible for all inspection-related improvements.

If acquiring a home is starting to look more interesting, be careful not to confuse buying a house with investing in the real-estate market, whether as a landlord, a property speculator or a stock investor buying homebuilder stocks or real-estate investment trusts.

Real-estate investing can still be pretty dicey in the current market. There may — or may not — be money to be made. But buying a home is all about providing a place for you and your family to live. And as home prices settle at lower levels, you just might become a homeowner much more economically than anyone has in a long time.