To Buy Now or to Wait...that is the Question

There's no doubt the market has been putting buyers to the test trying to decide whether it's the right time to make a move or whether they should wait a bit longer.

I was talking with a trusted lender who said he had been thinking about this very question and felt it was rarely beneficial to wait if you're ready to buy. The two primary factors to consider are rising interest rates and falling housing prices. He calculated that if interest rates rise .5%, housing prices would have to fall another 5% to make up the difference. Overall housing prices are currently relatively stable, neither rising nor falling significantly, indicating waiting isn't likely to be of benefit.

The past decade has been one of low interest rates coupled with unsustainably high home price appreciation as the supply of homes available for sale struggled to keep up with demand. As a result, home prices increased a dramatic 50.6% from 2000 to 2005. Unfortunately, consumer income didn't keep pace with housing prices, rising only 12.9% during the same period. This resulted in decreased housing affordability, which planted the seeds for our current market conditions.

In 2006 we saw a needed pause in the market...not only natural and expected after unsustainable price growth, but much needed to put our market back in balance. Home price growth stabilized in 2006, with prices relatively unchanged over 2005. Jeff Allen, Minneapolis Area Association of Realtors Research Manager, predicts that 2007 should be pretty stable with 2006 overall, with a bounce back beginning in the later part of 2007.

Flat housing prices and continued historically-low interest rates have improved affordability, creating a good environment for first-time homebuyers...a necessity for a continued healthy and growing housing market. If you're ready to buy, it's a good time to make a move.

Click to see the full Twin Cities Metro 2006-2007 Market Analysis by Jeff Allen, MAAR Research Manager.

Open House

The weekend was a forerunner to this beautiful week...it topped 60 degrees today!

People were out enjoying the weather this weekend, a perfect time for an open house. I had 28 groups of people through the house I had open on Sunday. It was interesting seeing the mix of people coming through... from just starting to look to ready to buy... from trying to decide whether to remodel or buy another home to getting ready to sell...from checking out neighborhoods to checking out other open houses while theirs was open...from looking around without their agents to searching for an agent...

Open houses are a great way to check out agents...it's a non-threatening way to get a feel for an agent. It's also a good way to get to know the market, both for pricing and for getting a feel for neighborhoods. One of the first steps after securing financing is deciding the area where you want to live.

Location is vitally important because while you can change the appearance of a home, you can't change it's location. If you don't like the neighborhood, the traffic, the view, the surroundings, there isn't much you can do except live with it anyway or move to a new location.

Don't skimp on your homework selecting WHERE you want to live...your sense of place can have a profound effect on your whole sense of well-being. Once you have that figured out you can focus on finding the specific property that's the right fit for you.

It happens over and over again that people 'feel' the right property almost as soon as they walk in...they don't even have to see the whole home before they know it's the right fit. Be patient and listen to what your body is telling you as you visit different homes...if you listen, you'll know when you've found the right home for you!

Spring

It's hard to believe that last week we had a dump of more than a foot of snow and now we're heading into the 40's and 50's. That, along with the daylight savings time shift tonight and the vernal equinox less than 2 weeks away means spring is really coming!

My compter went into hibernation...actually worse, the hard drive crashed and I've been 'making do' with various computers while bringing mine back to life...a slow process. The worst part of the whole thing was the discovery that the new website I'd been working on for the last couple months wasn't backed up!! Oh, well...it will be re-built even better...only much later!

Spring season is starting...I was out with clients yesterday slopping through muck and mud...a true sign of spring. We also had multiple offers on a new listing this week...another sign that spring is on the way.

If you're thinking about buying, it's time to spring into action. Don't neglect getting pre-approved before seriously looking, you never know when you're going to find the home you want to buy! Case in point...in reviewing the offers this week the buyer that was chosen was already financially underwriting approved, just waiting for a property.

You've no doubt heard the news stories about mortgage horror stories and companies going out of business. This makes true pre-approval, not just 'looks good' approvals, even more important.

A reputable mortgage company and trustworthy loan officer are also vitally important. Buyers need to know they will truly be able to afford their home and won't face rising payments and/or interest rates that may force them out in the future. Sellers want to feel confident their home will not just get a signed agreement, it will actually close!