There couldn't be a better gift for your Valentine than a house! But is this a good time to buy?
The best time to buy a house is when you think about it, almost or already have the money together, and see a house you like. But how about the market? Isn't it time for the bubble to burst?
Here are some facts for you to chew on as you consider your options:
Average sold price increased 9.6% from November - January 2015/16 to Nov-Jan 2016/17
- Price per square foot increased 6.6%
- Available homes for sale decreased 8.6%
- Sold homes increased 9.1%
- Months of available inventory decreased 15% to 1.7 months, which means that the supply of homes available for sale would be sold off in less than 2 months if no new homes came on the market during that time. That is an extreme seller's market, but few people could afford to buy.
Back when the bubble did burst in 2008, the months of inventory was 15.1 months! That is quite a different market from now. And the general feeling among buyers then was that there was nothing on the market. Why? My guess is that there was nothing that was attractive to most buyers either price-wise or of the right quality. Sellers were just throwing their properties on the market "to see if I can get my price," and often they did no preparation and the houses didn't show well at all. A number of these sellers were desperate to sell because they had those evil negative amortization adjustable loans, so if they didn't sell before they adjusted, they could no longer afford the monthly payment. Once the crash happened, these folks had no choice but to either short-sell their homes or let them go into foreclosure. One aspect of those times that people today seem to have forgotten is that very few people could actually get a loan at all, so if you didn't have the cash to buy a foreclosure, you were out of luck.
Those loans and the other loose practices like "stated income loans" where you literally just had to be able to blow on a mirror to buy yourself a million dollar home, are gone. Today the loan process is brutal, but once you emerge on the successful side, you stand a much better chance of enjoying your home for a long time to come. And is it possible that the value will go up from here? Yes, it's possible--how much has it gone up since you've been keeping track? 10%? 20%? I bet you didn't think that was possible either, did you?
We may be 20 or 30% above the peak prices of 2006/2007 here in Northeast LA, but we are still cheap compared to other parts of Los Angeles. Interest rates may have moved from the 3% range to the 4% range, but they are still way below the 6 and 7% rates of 2008. The houses today are generally in better shape than they were before, and you have more tools to investigate the property before you even step foot in it. In short, the best time to buy is as soon as you can!