The unstable market has put some buyers on hold, but one housing expert says it actually makes sense to buy now.
Of course, that’s easier said than done. With the unemployment rate at 9.6%, not to mention today’s tighter lending standards, buying a home is simply unattainable for many people.
*27% of renters say they’ll never own a home
But for those who are wavering on the sidelines, Case explains that even if home prices don’t skyrocket like they did in the first part of the past decade, buying a home still is not only an investment in your future, but also one that you’ll benefit from every day you live there. Case writes:
Consider it this way: When Enron went belly-up, shareholders ended up with nothing, but when the housing market drops, homeowners still have a house.
Let’s not forget that homeowners can deduct the interest paid on the mortgage, which opens the door to other deductions that many renters don’t get the opportunity to take advantage of.
But the real savings are going to come from today’s low interest rates, and homes prices that have fallen nearly 30% from their peak in summer 2006. Case does the math for you:
Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. In addition, the down payment would be $42,600 instead of $60,000.
via Listed: MSN Real Estate’s daily blog – MSN Real Estate.
Downturn has produced more buyer-benefits: 1) Low rates: borrowers coming into today’s market can take advantage of some of the lowest mortgage rates we’ve seen in five-plus decades. 2) Tax credit: the homebuyer tax credit offered buyers a tax break of up to $8,000. 3) Cheap real estate: While hurting many homeowners and sellers, falling home prices have made buying more affordable.
Case concludes that:
…housing has perhaps never been a better bargain, and sooner or later buyers will regain faith, inventories will shrink to reasonable levels, prices will rise and we’ll even start building again. The American dream is not dead — it’s just taking a well-deserved rest.