5 Reasons Why Now May Be a Once In a Lifetime Chance to Buy a Home

Filed under: Market Comentary

In almost every major U.S. housing market today, it has become cheaper to buy than rent.  While there is no guarantee that home prices will not continue to drop and clearly we have not yet escaped our economic downturn, there are a series of indicators which may point to now as being the “perfect storm” of home buying.

Consider these factors:

Mortgage Rates Are At Their Lowest Levels in 50 Years
This news won’t surprise anyone.  It has been the topic of discussion for the past year in all real estate circles.  At today’s rates, it literally is often less expensive to buy than rent.  The rental market has been extremely active in past months and given increased rents, low mortgage rates, depressed home values, and the mortgage interest deduction, buying now makes sound fiscal sense.

The Mortgage Interest Deduction Appears to Be Here to Stay
Despite continual talks of tax reform, both the Obama and Romney campaigns appear to be committed to maintaining the tax deduction on mortgage interest- especially for the middle class.  Strong real estate lobbyists and the extreme popularity of this deduction with the general public make it unlikely that the current situation will be changed.

Home Prices are Cheap But Appear to Be Past the Bottom
In many areas across the country, prices have begun to rebound and are inching back up.  While it is doubtful that we will see the double-digit appreciation years that followed our new millennium, a steady upward trend is not unrealistic for the next decade.

Economic Recovery Almost Always Leads to Increased Home Prices
The recessions in the 1970’s and 1980’s were both followed by seven year periods during which home prices escalated approximately 20%.  This recession resulted in a larger drop in home prices and will likely take longer for significant recovery, but history dictates that a stronger economy will lead to the appreciation of home values.

Inflation Looks to Be Inevitable
Very recently, Federal Reserve Chairman Ben Bernanke announced a decision to begin a third round of “quantitative easing”.  This effectively means they are going to print more money.  The result is a decrease in the value of the dollar and an increased chance of eventual inflation that would greatly boost the prices of tangible assets, especially houses.  There are multiple factors at play but in essence, more money in circulation translates into higher prices.

Quite honestly, this “perfect storm” situation we find ourselves in is the result of severe economic downturn.  While we can not be certain that we will never see a worse economic crisis in our lifetimes, we definitely hope against it.  If our wishes do come true, it definitely creates a “Once-in-a-lifetime” opportunity now for home buyers.

Would love to hear your comments!


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