Here are 5 reasons why now is a good time to invest in the housing market.
1 – The downward trend may reverse. Actual foreclosures lag defaults and foreclosure notices, and both of these latter categories are going down. Default notices peaked in April 2009 at 142,062 and were at 96,469 last month, 30% below their year-ago level.
2 – The government programs have disappointed. Lots of foreclosures are coming now, because it took some time for folks trying to modify their mortgages under the government’s Making Home Affordable program to wash out. Some homeowners didn’t qualify, others did qualify but then fell behind on their modified mortgages. The Obama Administration mortgage relief program is now estimated to be able to help only one-sixth of the three million homeowners it had intended to help.
3 – Homeowners who are current may have options. Recently, the Obama Administration launched its latest effort, which would help homeowners who are underwater (they owe more than the house is worth) with their mortgages but are making timely payments by reducing the amount owed. That’s good for folks who want to refinance but haven’t been able to, but there are ramifications. One, it will lower their credit score. And any secondary debt, such as a home equity line of credit, will greatly complicate any modifications, or make them impossible.
4 – It’s all regional, remember? Some housing markets are doing just fine. If you think you want to retire to a new area, it’s a good time to go shopping for your next home; you might just find an excellent price. But beware the monthly fees: In communities with lots of foreclosures, people are walking away from their condo associations, too. The folks left are being forced to pony up higher amounts every month to make up for missing neighbors.
5 – Bargain hunters have plenty of time to catch the auctions. There’s going to be a lot of inventory for a long time. Foreclosed homes actually put up for auction reached 147,003 properties in August, and that number can be expected to go up before it goes down. Lenders will be careful not to flood the market by putting all of their repossessed homes up for sale at the same time. There is already more than year’s supply of existing homes on the market now.
These are just a few of the reasons we still think homeownership makes a lot of sense.