Regardless of what you may have heard elsewhere, reports of the death of the housing industry are greatly exaggerated.
OK, so the "for sale" signs are staying up longer than they did several years ago. And yes, there are a lot of folks having trouble making their loan payments on time. But people still need a place to live, and most folks plan to own.
The reality is that most Americans still see real estate ownership as a worthy long-term financial goal. And why shouldn't they? With the exception of a few folks who bought at just the wrong time, most Americans find that buying their own home turns out to be the best investment they ever make.
If you've gotten tired of writing checks to your landlord, you're not alone. Even with the current economic downturn, the Kiplinger editors still expect 5 million resales this year, up from 4.9 last year.
There hasn’t been a better time to buy a house in the last 30 years. Here’s why:
1. Prices are remarkably low, especially in neighborhoods that have been hit hardest by foreclosures. In some cases, you can buy a house for less than the cost of a lot in the same subdivision. People forget that houses don't have a memory. In other words, once the foreclosures are gone, the house becomes worth what it would cost to replace it.
When the cost of the sticks and bricks and land exceeds your purchase price, you are getting a true bargain.
2. Sellers are ready to be flexible on price and terms. Smart sellers in this market know that they have to be flexible in order to make a sale, and some sellers simply MUST sell. Plan on seeing a lot of houses and making a lot of offers to get the best deal. And don't rule out bank-owned homes and HUD properties, as they may offer some of the best values around.
HUD is so anxious to sell its homes that it offers buyers a "$100 down" loan program provided you plan to live in the home you buy. You can even add up to $5,000 in needed repairs and upgrades to the loan.
And the rate is locked in at today's rate for a full 30 years.
3. Interest rates are still at remarkably low levels. The greatest expense you will have associated with housing is the interest you pay over the years on your home loan. If you can lock in a 30-year fixed rate now, you will benefit every month for the next three decades.
When considering your loan options, don't overlook the FHA 5/1 adjustable rate loan. If you plan to own your home for less than ten years, you may actually be better off with an adjustable loan than a fixed rate. Not only is the rate fixed for the first five years, but it can rise no more than one percent per year thereafter. Check with your lender for details.
4. This recession is ending. We are already beginning to see a slow decline in unemployment. Sooner or later, this country will experience an economic recovery.
When it does, Atlanta is well-poised to benefit as the migration to the sunbelt continues. In addition, the Atlanta area has no natural boundaries, allowing builders plenty of land for inexpensive lots.
That keeps prices competitive on a national basis. Remember, Atlanta traditionally ranks high on quality of life issues.
My final piece of advice is this: Don’t wait too long.
Interest rates have already begun inching up, and inflation is clearly on the way. Know that the Federal Reserve has been engaging in what they call "quantitative easing," which means that they have been artificially holding down interest rates to help end the recession.
This is only temporary, and it can't go on forever.
When inflation occurs, home prices will rise, and you’ll wish you had bought a house when you had the chance. I honestly do not believe you will see an opportunity like this again in your lifetime.
John Adams is an author, broadcaster and investor. He answers real estate questions on radio station WGKA (920am) every Saturday at noon.
For more real estate information or to make a comment, visit www.money99.com.
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