Is now finally the time to buy a house? In many ways, and in many local markets, the answer seems to be a resounding yes. Home values in many markets have plummeted back to 2003 levels, fixed mortgage rates are near record lows, and the much anticipated economic recovery seems to be underway.
While now is generally a good time to enter the real estate market, unemployment rates are still high, and obviously it doesn’t make sense to take a mortgage unless you’re fairly certain that you are not going to be laid off. So the question of how secure your job is becomes a major factor.
In addition, it’s important to realize that although the housing bubble has burst in most US markets, there are still some local bubbles around the nation, so if you reside in one of them, it may still be prudent to keep waiting. A good way to determine whether your local real estate market is still in a bubble is to look at the rent ratio – the higher it is, the more cautious you should be.
The bottom line: the housing market is not detached from underlying economic factors such as growth in jobs, growth in output and rising consumer confidence. Watch for those, as well as for the rent ratio in your community, and take into account the stability of your own job. All of these factors should be considered before you decide whether now is a good time to enter the real estate market. From where we are, all of these numbers look positive – but the ultimate decision should of course be yours and based on your individual situation.