Is Now the Right Time to Buy?

Many signs point to now being an ideal time to buy.

1. Attractive Interest Rates. With interest rates remaining at historic lows, this increases an individual’s purchasing power and makes the mortgage payment more manageable.
2. Increased Affordability. The California Association of Realtors recently released its First Time Home Buyer Housing Affordability Index which showed that the percentage of households that could afford to buy an entry level home in California stood at 59 percent in the fourth quarter of 2008, compared with 33 percent for the same period a year ago.
3. New First Time Home Buyer $8,000 Tax Credit. A tax credit is available for first-time homebuyers under the American Recovery and Reinvestment Act of 2009. If you buy a home between January 1, 2009 and November 30, 2009, you may be eligible to receive a tax credit for 10% of the purchase price of your home—up to a maximum credit of $8,000.
4. Increased Conforming Loan Limits. The government recently reinstated the increase of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 area median home price or $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac, with an overall maximum cap of $729,750. Reinstating the higher loan limits for mortgages in high-cost areas like our own is important and will help reduce inventory and improve liquidity in the overall mortgage market.
5. Decreasing Inventory and Increasing Prices. Recent market data has shown a dramatic shift, with year-over-year inventory levels at a 3-year low and prices increasing steadily since April.

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