This is a commonly-asked question from potential buyers, and not always an easy answer – one of those “it depends” kinds of things.
Here are some thoughts:
If you are planning to stay in your next home for at least 3 years of more, the answer is YES, provided you have a good credit record, income, and savings in the bank. But if the length of time is less, especially less than 2 years, in our area I would say it is probably not a good idea, if you expect to sell in that time frame and want to at least break even.
Affordability in our area is better than it has been in a very long time, in terms of housing prices but also the cost of getting a loan (the rates AND the associated costs). As an example – in 2003 the cost of a 30-year fixed loan on a $250,000 mortgage was $278 MORE per month than it would cost today. Be aware that the cost of getting a loan IS shifting upwards (e.g., basis for FHA loans), so that’s something to keep in mind in the near term. And there is talk of rates rising later this year, with some mild shifting already seen. But rates are still great compared to a year or two ago, however.
ROI, or return on investment for real estate in the last 12 years, compared to stocks, is very favorable, even in the face of the big shifts in the market, as you can see in the graph.
Financial experts, economists, and others who invest in real estate have become much more in favor of buying a home in 2012 – here is a sample of what is being said:
CHRIS THORNBERG (founder of Beacon Economics and former UCLA economist) – in 2007 he said “What’s the point of buying today when you can buy it in a year for 10 percent less? For the life of me I can’t figure out that logic” BUT in 2012 he says “Even if you’ve been thinking about buying a condo in Vegas or buying a condo in Miami, buy now. Now is a great time to buy a home.”
WARREN BUFFETT – “If I had a way of buying a couple hundred thousand single-family homes I would load up on them.”
JOHN R. TALBOTT – in 2003 he predicted the Crash; in 2006 he wrote about SELLING NOW, and today he says “it is now time to buy a home.”
We know there will be shadow inventory impacting the housing market and that bears keeping mind, but it can be good opportunities for buyers.