Lately I’ve been asked the question, “Is now really a good time to buy?” by many interested home-buyers. Rather than take my word for it, read the article below for an objective opinion.
Housing: Is it a good time to buy?
Lower prices, low rates and incentive create a window of opportunity for buyers.
Updated: 11/13/2009 09:40:04 PM MST
Jeff Hanson has been in no hurry to buy a home over the past two years, content to watch as home prices in most areas along the Wasatch Front continue to slide.
But the recent extension of the $8,000 federal home buying incentive has convinced Hanson that now’s the time to buy, even if he isn’t exactly sure the market has hit bottom.
“It’s really the combination of the incentive, the lower home prices and low interest rates,” said Hanson, who has been renting for several years.
It’s difficult even for the experts to know if the market in Utah has already bottomed or if home prices will fall even further. But one thing is for sure: The mix of lower prices, low rates and buying incentive is a powerful combination that isn’t expected to be around beyond mid-2010.
The federal income tax credit has been extended for a third time earlier this month. The credit was first offered in 2008 as a $7,500 no-interest loan that must be repaid in 15 equal annual installments. This year, the incentive became a much more favorable $8,000 tax credit that does not have to be repaid in most cases.
Set to expire on Nov. 30, the credit has since been extended to those who go under contract as late as April 30, 2010, to buy a home. It’s also been expanded to include a $6,500 incentive for repeat buyers. Additionally, the credit will now be available to more taxpayers with higher incomes, said IRS spokesman Bill Brunson.
With the incentive extended three times — and improved in some way each time it is extended — many are wondering what will happen after the latest April deadline.
Hanson’s Realtor, Lisa Jungemann of Distinctive Properties, is telling prospective buyers not to count on another extension.
“They [the government] have made it pretty clear that this is it — they aren’t going to extend this again,” she said.
And economists say that mortgage rates, which have been historically low due to a combination of factors relating to the bad economy, are expected to move upward as the economy improves.
This week, 30-year home loan rates fell to 4.91 percent from 4.98 percent a week earlier, mortgage company Freddie Mac said. It is the second consecutive week that mortgage rates have remained below 5 percent.
Current conditions have created a window of opportunity for first-time buyers, said Salt Lake City Realtor Luann Lakis.
That includes buyers such as Jason Atuaia, who is looking for homes in the West Valley area. Atuaia, who is renting now, said he first heard about the incentive earlier in the year, but hasn’t been able to find a new home quickly enough to meet the Nov. 30 deadline. “I’m glad the extension came through,” he said.
While repeat buyers are now eligible for $6,500, Lakis believes the majority of those getting an incentive will continue to be first-time home buyers.
“This [incentive] isn’t going to have as big of an impact on the repeat buyers, because they have a house to sell,” Lakis said. “The first-time buyers don’t have that to deal with.”
Many real estate agents are expecting a flurry of home-buying activity after the holidays — normally a fairly quiet time for home sales — that will last through April, as people hoping to cash in on the incentive start looking for homes.
Says Realtor Dan Christensen: “There’s not ever been a better time to buy than right now.”