It is certainly a buyer’s market, which means that home buyers have the advantage in negotiations, as well as a broad range of choices. However, since it is a difficult market for sellers, our team’s counsel to inquiring would-be buyers is that they need to be reasonably confident that they will live in the home for a minimum of three years, preferably longer. (For certain properties, renting rather than selling is quite feasible.)
For most people, this means they need to have job security. If there are rumors of major layoffs where you work, it would probably be best for you to take a pass on home ownership for now (or leveraging yourself any further).
But if you ARE prepared to “buy and hold,” it is hard to imagine a better time and place to buy real estate than here in Harrisonburg in 2009. Here’s why:
1. Market values have been relatively stable. The average home price in the Harrisonburg area dropped only one-half of one percent in 2008. (That’s not a misprint.) See this previous post for more details.
2. Sales are down. 25% fewer homes sold in 2008 than in 2007. That means there are some sellers out there who have been trying to sell their home for a long, long time. Some of them will negotiate significantly — you just have to find out which ones.
3. Interest rates are unbelievably low. A couple of weeks ago you could get 4.75% on a 30-year fixed mortgage. Rates are still hovering in the low fives. The savings on a loan amount of, say, $200,000 at 5.00% rather than 6.50% (which was the high water mark for rates in 2008) over the course of 30 years is mind-boggling. We will run some numbers for you in a future blog post. (By the way, 6.50% is a really low rate, too — historically speaking.)
So, to review…
Right now in the Harrisonburg area you can buy a home at a discount in a market that is relatively stable and lock in an interest rate so low that you’ll probably never a deal on a mortgage like that again in your lifetime.