My son received word today that the sellers of the house he loved accepted his purchase offer. Our whole family is very excited. Not just because he is taking the first step toward home ownership, but instead, because he is purchasing a home at the best time to buy residential property in American real estate history.
You might ask me how I can say that at a time there is so much uncertainty in the housing market. Well, let’s talk about the things we can be certain about:
1.) He would not have been able to afford a home in this neighborhood 4 years ago.
In 2006, prices had just finished a six year run with appreciation hitting 89% (as seen in the chart below).
At that time, my son was simply priced out of the market. Now he can live in a house he wants, in a neighborhood he loves.
2.) He will receive an $8,000 tax credit, which he wouldn’t receive if he put the home in contract after April 30 of this year. That’s $8,000!
“Think about the connection between interest rates and prices. If prices come down another 10% but interest rates increase by 1 percentage point, that would mean the same monthly payment today versus waiting.”
4.) He will reap the benefits when housing prices come back.
Housing will come back. It always does. According to Moody’s Economy.com and Fiserv, the market where my son is purchasing will be back to peak prices in the next 10 years (see map below). At that time, his decision will look awfully good.
5.) He will enjoy all the fabulous benefits of homeownership: security, pride of ownership, a sense of community and decent investment returns as a bonus.
Why wouldn’t I be happy for him? Now is the best time for anyone to purchase a home.
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