For over a year we’ve heard periodically that it’s finally time to buy! The real estate market has hit the bottom and property values are going up! Could it actually be true – is it time to buy a new home? Unfortunately the answer is never cut and dry.
The Bottom of the Slide
There is quite a bit of evidence to the fact that we may be seeing the end of the universal slide in housing prices. It’s unlikely that the prices are going to drop much more. Consumer confidence in housing is creeping back up and prices on existing homes crept up as well recently. More interestingly, new home starts have lifted considerably which tells us that there are plenty of people looking to buy – at least at the highest level.
Location, Location, Location
If you go to certain areas of the country, you’ll hear that the recovery there in housing has been going on for years. Not every area was hit hard by the housing bubble, and other areas are still deep in a mire of low prices. The bottom line on location is this: it matters more than it ever did before. Travel fifty miles one direction or the other and you may be able to snatch up a great bargain. Travel a few miles a different direction and prices are already at or near their 2007 peak. Each market is its own animal and must be treated accordingly.
The Foreclosure Glut
Conventional wisdom states that if the market is finally looking a bit steadier, there must be a more limited number of houses. This is partially true. In most areas you’ll find a few types of homes. The first is the well-cared for home that is priced well for the market. These homes are highly sought after and are purchased quickly in many areas.
The other homes are not as heavily sought after. The first is the foreclosure or short sale homes where there is little or no maintenance done. These homes are often passed over even by professionals as they have serious conditions like missing plumbing or electrical. They may also need structural repairs or just be in terrible shape. The other homes that tend to sit on the market are those that are priced too high for the current conditions. Big houses especially are falling prey to this – they sit on the market simply because few people are interested in buying mini mansions at 2007 prices.
Finally, there is speculation, and justifiably so, that large banks are still sitting on piles and piles of foreclosure homes that are still being released onto the market. The sheer volume of homes coming on to the market may keep things a bit bogged down in many areas for some time to come – but the quality of the homes coming on the market is far different than the homes that are placed on the market by careful homeowners. These foreclosures may have sat empty for years and need extensive repairs – not a likely home for many would-be homebuyers.
The Coming Flood
Finally, for those waiting to buy a new home, there is one more major consideration for the market that not many people are talking about just yet. The Baby Boomers are hitting retirement age in record numbers. Many of them are downsizing and moving into retirement communities or into smaller retirement homes.
With so many homes soon to come on the market – large, family homes at that now that the empty-nesters are living smaller – new buyers will have their choice of home at reasonable prices for some time to come. This is compounded by the number of Boomers that own multiple properties. They may choose to sell one or both of their properties as they move and retire, essentially keeping the market flooded in many areas of the country.
In many areas where Baby Boomers are already starting to retire or at least downsize as their children move out and move on, the large family homes are already hitting the market. In some cases, these homes are more affordable, or at least just as affordable, as renting. Those families looking for space to grow are in a great position to position themselves in safe neighborhoods in well established areas – an inviting prospect to those tired of crowded apartments or unfinished neighborhoods stagnant in the market. There are even better deals available for those willing to get their hands dirty and do a bit of renovation on the properties.
The bottom line here is not exactly clear. This could be a good time to buy a new home. But it will likely also be a good time just a few more years down the road.