Is Now the Time to Buy?

Dr. Dani Babb: “Go for it”
With all the uncertainty in the housing market, buyers have been staying away in droves.
While the reaction may be understandable, it's not necessarily smart.
Some buyers should be taking advantage of the situation -- not sitting on the sidelines and waiting for prices to fall even more, says Babb, real estate analyst. It's not necessarily a wise decision. If you've got good credit, a plan to stay in the new home for a few years and your dream house in your sights, snap it up.
"If you're renting right now, there's a really good chance your mortgage won't be much more than your rent in many areas," says Babb. "You'll get a tax break, and if you stay a few years, you'll see it start to appreciate as well."
While we may not have seen the market bottom out just yet, that's not significant for people who plan on staying in a home for the long haul. "There is a chance that more foreclosures will put downward pressure on prices," she says. "But if you're going to be holding that property for more than five years, another $10,000 or even $20,000 drop isn't going to matter much." The market will recover, and your house will appreciate.
You've also got selection on your side. Homebuilders are offering steep discounts and posh upgrades on brand-new digs. Fixer-uppers and foreclosed properties are selling for a song. Eager sellers are offering incentives from all-expenses paid tropical vacations to brand-new cars to help move their property.
Babb argues that the stricter lending requirements may be a boon for buyers as well. While a prospective buyer might look at the housing market today and worry that an exotic loan might leave them in foreclosure a few years from now, Babb says it's far less likely. You may not get a loan for that million-dollar home, but it's probably because you couldn't have paid for it, anyway. "Tighter lending standards are a good thing overall, because it helps make certain that a borrower really can afford the home," she says.
Unlike the hot market of a few years ago, where buyers had to put in offers -- often above the selling price -- just days after a house appeared on the market, buyers today are in the driver's seat. You can take your time finding a house, visit it a few times and do necessary research before putting in an offer. And you'll likely be able to haggle with the seller to drop the price, do repairs or pay for closing costs.
Finally, Babb notes that interest rates remain at low levels, which means lower monthly mortgage payments. "As rates drop, those who qualify will find it even less expensive to buy the home of their dreams." Lock in a low rate today and you'll reap the benefits for years to come.
While Babb is bullish on buying, she adds a few caveats. "If you want to buy a property and flip it in six months, now is not the time to get back in the market," she says. "And if you've got a low credit score or are cash-poor, I'd recommend staying away from homes." She also recommends staying away from neighborhoods that have many foreclosures and areas that have sustained significant job losses during the past few years.
Since the market won't likely recover overnight, people who aren't quite ready to buy still have options. Spend the next few months polishing your credentials and get in the market. "Improve your credit score, build up your savings, and go for it," she says.