Rent rates are continuously increasing in our country while home prices and mortgage interest rates have hit unprecedented lows making home buying more feasible. Home buying now would be a great investment if your specific financial situation permits but let’s explore the time frame of this window of opportunity.

Am I losing my chance to snatch me a discounted home?

To be blunt, NO ONE can say for sure where the direction of the market will go. However, you may infer predictions based off a few key factors:

• Overall health of the economy – i.e. employment (or lack thereof –un and -under)
• Interest Rates
• Supply & Demand of the Housing Market

Keep in mind there are a number of other factors that affect the housing market such as demographics, government policies, consumer confidence, and etc.

Mortgage rates have consecutively hit lower percentages for some time now. Based off data from bankrate.com (last checked 8/8/12), 30 yr fixed rate had a slight increase to 3.81% and a 15 yr fixed at 3.00%. These are premium low rates and it is unlikely that it will move further down than the current rates.

Meanwhile, based off information from dsnews.com, unemployment rates stands at 8.3%. There are also issues with underemployment. For more information, please read the article Economy Surprises with 163k New Jobs in July, Unemployment Rate Up from dsnews.com.

Supply and Demand is also big factor for the fluctuation of home prices. Supply has decreased especially in this 2012 year as properties flew off the market by investors. However, there is a worry about the ominous shadow inventory that experts are afraid will drag prices even lower (supply increase, demand & prices decrease). The influx of distressed properties is largely due to the robo-signing scandal which occurred earlier this year. This incident caused many lenders to lag behind in listing their foreclosure properties and ultimately pushing them through. Still, Freddie Mac gives assurance by saying the “shadow” over the housing market is not as long as some may think.

Bottom Line: Again there is no way to give a 100% accurate prediction of where the housing market will go. Based off a few factors such as interest rates being low, -un and –underemployment rates remaining constant, and supply & demand showing positive signs exempting the shadow inventory fear, one can be optimistic about the housing market now.

In my personal opinion, I believe that although the housing market is rebounding, we will not, as Robert Shiller stated in the video above, be expecting a U shaped recovery. Although history doesn’t repeat itself exactly, based off the historical housing cycle, we have time with this window of opportunity.

The worst thing an individual can do is purchase a home without being financially prepared. We will be regressing into the subprime mortgage crisis era if we are purchasing homes we are not able to afford. Just because someone is able to afford the mortgage payments, does not mean you are able to afford a home. In fact, the monthly mortgage payment amount should be a third of a homeowner’s monthly income. We should also take into consideration taxes, insurance, HOA dues (for condominiums), maintenance costs, upkeep, and more. Lastly it is wise to have accrued 3-6 months’ worth of emergency prior to purchasing. These are all factors to consider prior to looking into homes. A great place to start would be www.daveramsey.com.

Do not rush into a home just to seize the opportunity. Make sure you are able to afford the opportunity first and then move forward.

If you believe you are able to afford purchasing a home, contact our distressed properties experts in Washington State for more information on these cream of the crop properties! Submit your information here and our experts will get in contact with you within 24-48 hours.

Peter

Full article at:www.seattleshortsaleblog.com

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