Next 6 Months: Best Real Estate Opportunity

Although many have been burned by the housing market within last 4 years, homeownership continues to be the best long term investment there is.

Few people argue the benefits of owning your home versus renting as shown in a recent paper by the National Association of Realtors which listed the overwhelming social benefits of home ownership. The US government has always been a proponent of homeownership encouraging the “American Dream” through their use of policies and subsidies, however, it appears as if this idea is fading away in Washington.

Last week, a USA Today article entitled “Feds Rethink Policies That Encourage Home Ownership”. This article explained that a big change may be coming by way of a proposal by the Obama administration next year. The government must find a way to now deal with the “collapse” of mortgage giants Fannie Mae and Freddie Mac which may result in larger down payments and a reduction in credit available to buy a home to avoid any future bubbles like the one we are currently faced with.

What this means to you

The future of the housing market seems turbulant at best. With FHA increasing their mortgage insurance premiums, the government weighing in on credit availability, the projected wave of foreclosure to arrive on the market and the anticipated increase in mortgage interest rates don’t paint homeownership in the best light.

What I will say is this: The next 6 months or so might be the best opportunity to buy real estate in a very long time.

As of today, interest rates are at about 4.5%, properties (besides short sales of course) are begining to sit on the market a lot longer giving potential home buyers leverage, and in real estate, leverage equals $$$. Yes, I do expect home values to dip but if you decide to wait, as most of you will and values decrease by 10% yet interest rates increase by 1%, you monthly payment would be the same as if you had bought today!

The difference, who knows what new policies or financial regulation will the government implement between now and then. What if 20% was the new minimum down payment? How many of us could afford it?