Is Now The Right Time To Buy A Home?

With the current real estate market in dry dock and investors sitting on their hands everyone wants the answer to the million dollar question….Is now the time?

The answer lies within your planned holding period…How long do you plan to keep the home?

Short Term (less than 5 years)

There are areas in the US that?are expected to?see as much as 74% gains in the next 5 years (North Fla..which I will cover in the near future) so there are definite opportunities that exist even in this market but buyer beware…these are far and few and due to significant proposed expansion of area facilities to enhance the values. The general short term for the real estate market on a national level is not good. Many areas have already seen as much as 20% pull back in recent values (southern Cal and southern Fla) and resale inventories have been sustaining high levels. However, the pullback is normal and in fact healthy for the long term survival of area values. This is cyclical and should be seen as a market cleansing….a time of preparation by those with short term goals.

Intermediate - Long Term (5+ years)

Again, there is no crystal balls so our best guess is based on historical data. I would consider risk - reward to be 50/50 at a 5 year holding period. The potential for further decline in values is still expected?and as a result lends to the risk of?losing value within the 5 year period. The risk rapidly decreases beyond that. The time between recent hot markets is 10 - 15 years (earlymid 70’s, midlate 80’s, early 2000’s). There is no way to predict how future events will impact the results but we can use a bench mark to determine what history would dictate provided other factors were not involved. That would put the next hot market at apx 2015…apx 9 years from now. Many believe it will be far sooner but all we can do is guess what the future holds. For intermediate buyers (5 - 10 years) this is a time of caution but for long term buyers there is no bad time to buy a home. It is very safe to say that in 10 years your investment will be worth more than you paid…and will likely be in the middle of another run!

In future posts I will cover some of the segmented markets?which have expected growth potential in the next 5 years. Be sure to bookmark the blog so you stay in the loop. Also, your comments are appreciated.

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