The Housing Market
The question now is how do all these relate to first time buyers or those who still dream of owning a home? When is the right time to buy? Is there a right time to buy? If yes, what do we look for? First, first time homebuyers should know if they are ready or not to take the plunge. The new stricter federal guidelines are applicable only to high risk borrowers. But with federal rates still at a relatively lower rate, and if you have the necessary requirements and a good credit score, there is relatively few things to worry about.
Still it can help though to look for indicators when it is a good time to buy. The indicators may consist of different economic signs. First, everybody nowadays seem to be saying that after the downtrend started in the last quarter of 2006, they say that it is now a buyer’s market because prices have started going down. Although it is not true for all the cities and states in the US, you can do a little bit of research such as looking in Table 1 that show which cities have increase home prices and which ones have declining home prices. The trend is likely to follow through during the next few months.
As I cited much earlier on, some cities still have home price gains because of other factors such as location, city economy and employment opportunities. The two latter indicators help increase and trigger a demand for new and available housing. Now, when houses are depressed in some cities and communities, it might appear like a good bargain, but when you are also moving into that city and would soon be looking for a new job, you might want to consider not just the home prices but also look how healthy the city or community’s economy is.
Another scenario would be if you look for a house to buy where you are at right now and find that prices have relatively stabilized, then more likely than not you are at the right place at the right time. This is because you probably have a steady job where you are at right now and one thing that lenders or creditors look for with first time home buyers is a history of employment and credit worthiness. One reminder or word of caution though, always remember that the mortgage that you should consider available is one that will only cost you a third or less than a third of your household’s net income.
Anything more than this will prove to be a hardship for you and your family. House payments – if they are within the affordable rate of a third of a household’s income is a viable long term commitment than getting something that is out reach hoping the household income will increase in the near future. It is better to start small and affordable rather than risk everything for a bigger mortgage. Remember, buying a house is the single biggest investment that you and your family can commit to.
Hence, making sure all the indicators are favorable to your making the mortgage payments in time. Otherwise, you might join the predicament of the housing cycle – that is – the busted end of it.
Anderson, J. (February 20, 2007) The Housing Market Puzzle: Prices are falling slowly. But no sign of a dangerous pop. What’s the outlook for the rest of 2007?. Kipplinger. Retrieved on May 23, 2007 from: http://www. kiplinger. com/features/archives/2007/02/housingmarket.