I get this question several times a day lately, and it’s evidenced by the market’s mood and the lagging home sales reports of late. However, the two factors that should determine the answer are prices and interest rates, and both have seen increases as of late.
According to the California Association of Realtors (C.A.R.), California prices rose 1.2% from July to August and were 8.6% higher than July of last year. Interest rates have risen from a low near 4.00% to around 4.375% this week. Anything else we may hear about rates or prices going lower is just speculation at this point – the recent figures are what matter most to me.
“Buyers who are holding out should consider the opportunities in today’s market,” said C.A.R. President Steve Goddard. “Favorable home prices and interest rates at or near historic lows make housing affordability the best in recent memory. Anyone who is in a position to buy a home should do so before either of these key factors rise.”
Sean O’Toole, Founder and CEO of ForeclosureRadar.com has looked at historical pricing and noticed the following trend which I also belive to be true:
“Every single significant increase in home prices in the last 100 years was immediately preceded by government intervention. The evidence is irrefutable. Every time the government works to make housing more affordable, prices rise. This actually makes perfect sense.
Buyers always have, and always will, buy as much home as their banker tells them they can afford. If you make financing cheaper you increase the amount buyers can pay. But instead of getting more home for their money, prices simply rise to reflect the change.
Hopefully at this point you are seeing a bigger picture. Home price appreciation is largely just inflation, and housing bubbles are a recurring failure of our government to learn from its past mistakes. Rather than looking at the big picture, government officials, and our representatives, continue to jeopardize our future with the latest quick fix to a problem they don’t seem to understand. Whether through tax benefits, subsidized financing, or regulatory easing, expect prices to rise with the onset of our government’s next grand experiment in making homes “affordable”. Just remember that you now know what comes next.”
Sean, I couldn’t have said it better!