Is February the “Right” Month to Buy a Home???

February 6, 2011 | Comments Off on Is February the “Right” Month to Buy a Home???

By Melinda Fulmer of MSN Real Estate

February buying advice (© image100/Corbis)

In this uncertain market, it’s hard to decide whether to take the plunge and commit to a home purchase while prices are so low or hold off to avoid getting stung by further declines. With prices falling in most major cities, can buyers afford to fall in love? We’ll help you make that decision.

We’ll also examine the “shadow inventory” of foreclosures that is looming in your city, and syndicated real-estate columnist and author Ilyce Glink will answer a reader’s question about whether to trade up now or keep saving for a larger down payment.

Should you wait to buy?
Homebuyers got some chilling news last week, with S&P/Case-Shiller’s November Home Price Index. Nineteen of the 20 metro areas surveyed reported home-price declines. Indeed, nine cities — Atlanta; Charlotte, N.C.; Detroit; Las Vegas; Miami; Portland, Ore.; Seattle; Tampa, Fla.; and Chicago — hit a new post-bubble low, lower than the plunge in spring 2009.

It’s enough to give buyers in many parts of the country cold feet about taking the homebuying plunge. Sure mortgage rates are near historic lows, and sales are picking up, according to December sales figures, but how much further will values fall?

That’s the billion-dollar question. David Blitzer, chair of S&P’s Index Committee, says that prices in its 10-city and 20-city indexes could hit a new post-peak low as early as this spring.

“With these numbers, more analysts will be calling for a double dip in home prices,” Blitzer said. Indeed, the National Association of Realtors reported that the median price of existing home sales declined 1% to $168,800 in December on a higher inventory of foreclosures, even as sales surged 12.3% from the year prior. (Bing: What’s the median home price in your area?)

The only markets posting home price gains in November were San Diego, Los Angeles, San Francisco and Washington, D.C.

So does that mean you should put your search on hold?  Not necessarily, according to another report by real-estate search website Trulia.

While it’s likely that prices could remain depressed for some time, the cost of homeownership also has plummeted to some very attractive levels.

In 72% of the top 50 U.S. cities, declining values have made it cheaper to buy a home at the median list price than to rent a two-bedroom home. Cities such as Miami, Las Vegas and Phoenix that have been flooded with foreclosures are now much cheaper places to buy, even with the cost of private mortgage insurance, homeowner association fees and property taxes.

However, in other real-estate markets like Seattle and Portland, it’s still cheaper to rent.

Maybe the overriding factors in this decision should be the amount of money you have to put down, and how long you are willing to stay in the house you buy. The recovery could be excruciatingly long.



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