By Mark J. Donovan
Interest rates on home mortgages are at their lowest levels in several decades. Thirty year fix rate mortgages are now available below 6%. In addition, the housing market has been in a decline for the past couple of years. If there was ever a time to buy a home, now is the time. Yes, you could try to time the bottom on the housing market, but similar to predicting the bottom of a bear market, it is a very tough endeavor.
Also, many are predicting the housing market to begin to rebound in late 2008 or early 2009. Personally, I think it may take a little longer. Regardless of exactly when the housing market will rebound, the fact is there are few times in modern history where both home prices and interest rates have declined so significantly.
In addition, there is a glut of homes on the market today, both new and used. Builders have inventory that they need to dump in order to pay their creditors. There are also many homeowners who have been trying to sell their homes for a year or longer. It is truly a buyer’s market, and both the used home sellers and builders are willing to negotiate.
Trying to time the bottom of the housing market by waiting a few more months could cost you more, both in terms of a higher purchase sale price, and in higher interest rates. Though the Fed has been cutting interest rates dramatically over the past couple of months, there is the real threat of rapid inflation. If inflation begins to rear its head to any appreciable level, the Fed will quickly reverse its position and begin to ratchet interest rates up.
So if you have been considering buying a home don’t wait. Now is the time, with both declining interest rates and reduced home prices.
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