The Opportunity of a Lifetime for Homebuyers?

The 2013 home-buying season looks to be one for the history books. Confidence in the US housing market is coming back strong. Recent statistical surveys indicate that prices are on a significant upswing, such as shown in the following graphic from Case-Schiller and KCM.

Is 2013 “the opportunity of a lifetime” for homebuyers? It looks that way, for quite a few reasons:

• Investors have once again moved their money into housing, this time as landlords, according to the Wall Street Journal. And the prices of foreclosed and bank-owned properties have quickly re-stabilized as a result.
• Interest rates are at generational lows. If you need to borrow money to buy real estate, your purchasing power is now as strong as it will likely ever be. Run the numbers to compare monthly payments on a mortgage at both today’s rates of 3.5% and projected year-end rates of 4.5% or higher. A 1% increase in interest rates typically results in a 10% drop in purchasing power for homebuyers. “Interest rates like this aren’t going to last forever;” says David Bailey, Managing Broker of Baird & Warner’s Evanston Office. He thinks the combination of low rates and comparably lower prices is the perfect storm of opportunity for renters and move-up buyers. “Never again in our lifetimes will interest rates be this low,” advises Bailey. (If you doubt him, check out this helpful chart that tracks interest rates during the past 40 years, by clicking here.)
• Expectations for real estate market appreciation have returned to “pre-bubble” levels. The following chart tracks expectations for appreciation in the real estate market (HT Case-Schiller and KCM). Confidence has apparently returned to normal levels, and market-endangering speculative attitudes do not appear to be returning.
• Based on conservative estimates of housing price appreciation, the value of the home you are thinking about buying today will likely be 10-15% higher in just 3-5 years. Once again, Bailey offers sage advice for current homeowners in Evanston: “If you’re a homeowner who wants to move up but is waiting for a price gain of just a couple of percentage points on your current home, you’re missing out on this opportunity today’s real estate market provides for serious homebuyers. 2013 is shaping up to be a once in a lifetime opportunity to buy with the high-value-creating combination of lower sale prices and borrowing rates. The housing values available today will no longer be around just a few months from now.”

As you can see, there are strong reasons to make a housing purchase in 2013.

As I often say on this blog, “Through the mechanism of buying and selling, we can all obtain a much higher standard of living…”

By approaching real estate with the right ways of thinking, we can not only have a great buying or selling experience, we can also get the best price possible in the shortest time required. The real estate market can be a tough place, and I can help you learn it’s customs and quirks so that you don’t just survive it, but actually thrive as you participate in it.

Visit my other site at Baird & Warner. Let’s go do some “housing” together.