Home Prices and Interest Rates Are At An All-Time Low
You’ve been renting your home for a while, and while you know that the monthly check you write to your landlord is money you’ll never see again, you’re satisfied with what you receive in return. Your apartment is adequate, and you’ve been able to watch the unpredictability and drama of the housing market with a sense of security and distance. While homeowners around you have been tormented by the instability of their biggest investment, you’ve been calmly writing one small, steady check per month, not losing much, but not gaining anything either.
At this point, the crisis seems to have hit a floor. Prices for condos and single family homes are now lower than they’ve been in many years, and barring the rise of another bubble, they may never be this low again. Not only are houses inexpensive, but mortgage interest rates are also at unprecedented lows. More than any other time in recent history, it’s possible to buy a home that’s been cut in price by tens of thousands of dollars, and it’s possible to do so with a mortgage rate of three or four percent, which is low by any standard.
Investing in Property in 2012
But potential buyers are still hesitant. And their reasons for hesitation are wise. After all, aren’t wild enthusiasm and reckless speculation the same feelings that pushed many current struggling homeowners in over their heads? It’s true that there may never be a better time to buy a house, but this message may bear more truth for some potential buyers than others. Consider investing in property now if any or all of these circumstances apply to you:
1. You plan to keep the house for at least five years, and ideally more. The value of a low interest rate increases with the length of time you plan to spend in a home. And while it’s easy to be a buyer right now, it’s not so easy to be a seller.
2. You’re prepared for the financial surprises that come with homeownership. These include maintenance costs which can be sudden and steep.
3. You can afford a down payment of at least 20 percent.
4. You actually need a house to live in. If you’re just looking for an investment, research mutual funds and treasury bonds carefully before you turn to real estate, which can be far more cumbersome and risky even in the best of times.
Are you considering a real estate investment right now? Share your thoughts with our readers in the comments section below.