What is the Tipping Point for Waiting to Buy a Home?

Just how long is too long to wait to buy a home with current market prices and conditions? For those real estate investors and would-be home buyers, at what point do you get off the fence and make a purchase?

For those waiting to find the best real estate bargain, you have to figure out where the real estate value bottom is for your local market and time your purchase accordingly. It’s not like making a purchase at a store, where you see an item’s on clearance or been marked down 40 percent. Trouble is, in real estate, there are no guarantees. Those who bought two years ago might have thought they were getting rock bottom pricing.

There are numerous, marked differences between then and now. First, interest rates are a good deal lower than they were two years ago. Indicators of the last couple weeks, however, show they, too, may have already hit bottom as we have seen slight ticks upward in currently very favorable mortgage interest rates. Second, we are seeing more promising economic indicators with signs pointing to a slow road to recession recovery.

Third, the latest national housing survey by Fannie Mae, shows 70 percent of Americans believe it’s a buyer’s market. This number is up 6 percent in this June/July survey, as compared to survey results in January 2010. The reasoning is now is the time to buy and, as more buyers enter the market, demand will increase as will home pricing. Buyer’s markets never last and it’s only a matter of time before the market advantage will change to the sellers.

Sometimes, all it takes is a perception. If the public believes the real estate market is stabilizing or is just plain tired of hearing all the negative hype around real estate (or tired of playing the wait-and-see game), it will act accordingly. After all, everyone needs a place to live. It may as well be in a home currently priced at $235,000 vs. the original price tag of $300,000.

For real estate investors, the current market could be likened to the Perfect Storm. For those who have the investment dollars, the timing has never been better. With all the foreclosures on the market, there are deals to be had. Perhaps equally important to investors, there are now more families than ever forced to be renters as a result of foreclosure or short sale. This growing rental demand will remain for several years to come.

To further support the idea of becoming a landlord or increasing one’s rental property portfolio, let’s review more of Fannie Mae’s survey results. One-third of respondents said they would be more likely to rent than buy their next home. And 60 percent of those already renting said they would also be more likely to rent their next home. That’s a huge number of renters who are planning to remain renters.

The scales are definitely tipped in favor of buying a home or investment property now. Will you or your clients take advantage of this tipping point or look back with regret?