That is what the New York Times is saying. All signs point to the buying opportunity of a lifetime for those who can qualify for a mortgage: housing prices have dropped, mortgage rates are down to 5.5% with talk of going even lower and there is $7500 federal tax credit for eligible first time buyers.
Some Interesting Quotes
Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan
“You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”
The Big Fear
Loss of equity is the big fear. Many prospective buyers that I have talked with recently are cautious about investing their money into a home because they are afraid that housing prices haven’t hit bottom and that they won’t get back what they paid. The table below comes from a study ( also linked in NY Times article) done by the Center for Economic and Policy Research and the National Low Income Housing Coalition called “The Changing Prospects for Building Home Equity” which tries to predict locations where the equity positions of buyers purchasing now would be lower in 2012. The study has identified 33 markets (located in the upper right hand corner) where owners may have negative equity positions by 2012.
What I thought was most interesting about this particular chart was the position of St. Louis. Notice that it is on the lower left hand side in the section called Non-Bubble Markets and that in that it ranks in the middle of that list where the rank represents the size of equity from lowest to highest. What makes me feel particularly optimistic is the quote from the study about Table 1, particularly the last sentence: In comparison, metro areas without housing bubbles will likely accumulate positive equity in a relatively short period of time.
Looking for your first house?
3beds/2 baths completely updated 142,500
2beds/2.5 baths tuck-under garage, LEED certified 177,000
3beds/2 baths, needs some TLC, 89,000