Is it a good time to buy real estate?

People are always talking about the direction the property market is headed in. Everyone has an opinion, or else they want an answer. In truth no one can tell you for sure and certainly your REALTOR should not be giving you investment advice.

That said you just can’t stop people talking about it. Today the WSJ is running a great thought provoking piece about exactly this topic, Is Now a Good Time to Buy Real Estate? It’s a thorough opinion piece that sets out they determining factors of the housing market. Your can read the full article here.

One of the closing point of the article that the highlights is a really interesting conundrum for buyers especially those not already on the property ladder. That is the relationship of house prices to financing costs.

“There is, of course, one wild card that could affect most markets: rising interest rates. A big surge could pose a risk by making homes less affordable. Rates for a 30-year fixed-rate conforming mortgage spiked to 5.13% on Feb. 14 from 5.04% a week earlier, according to the Mortgage Bankers Association.

Since then, however, rates have fallen back below 5% on jitters over the Libya situation.”

The problem for buyers is this. If we are in a second wave of house price declines, the so called double dip recession, then it makes sense not to hurry to buy. But this could turn out to be a false economy if financing costs rise. Most obvious would be a rise in terest rates but there are other potential risks to mortgage costs going up for example if the Government makes changes to the current Fannie Mae / Freddie Mac / FHA system.

So some buyers might sit on the sidelines and see the price of the house hey want fall $20,0000 but end up paying significantly more than that $20,000 saving in financing costs over a 30 year period.

Only you can make a decision if now is the right time for your family to look at a real estate transaction, being informed as to the driving factors of the market is a great start towards deciding which direction to take.