There is an old saying - "Opportunities are never missed. Someone will take the one you miss." Today's housing market might just be an opportunity you should examine before you believe the national media headlines.
While sales of existing homes are off from their high, last year was still the fifth best year on record for existing-home sales. As for prices, the national median existing-home price remains within 2 percent of the all-time high set in 2006.
The biggest enemies of today's housing market and the economy in general are pessimism and uncertainty. Statistics clearly suggest a sizable pent-up demand in the marketplace. Yet home sales have remained soft. Why? Lack of buyer confidence.
The lack of buyer confidence not only impacts homeowners and the housing industry, but could easily spread to the economy. Any further weakening in the housing market and its related housing wealth impact could slow the economy into a no growth zone.
So what can we do to bolster confidence? Look at the facts. Over the past two years:
· Average wages have risen by 8 percent
· 4.3 million jobs have been added
· Total household net worth (assets minus liability) was more than $6 trillion higher in 2007 than 2005 (despite some losses in housing equity)
· Nearly 2 million new households were formed
This all suggests that there are many more people with jobs at higher wages and with higher wealth accumulation. However, the rising inventory of homes on the market and slower sales indicate that these potential buyers are uncertain and may be sitting on the fence.
Over time, homeownership has proven to be a good long-term investment. A look at today's market fundamentals makes a very good case for buying a home if your life and family conditions warrant it.
I encourage fence-sitters to get into the market and look around. I think you'll be pleasantly surprised at what you find.
There are many low-cost, sound mortgage products today - from prime conforming loans to those insured by the Federal Housing Administration. The economic stimulus package recently signed into law by the president will also help expand the availability of affordable and safer home financing options.
The package increases the loan limits on FHA-insured loans, as well as those purchased by Fannie Mae and Freddie Mac. Higher FHA loan limits will help an additional 138,000 Americans purchase homes and allow nearly 200,000 owners to refinance and potentially keep their home, according to research from the National Association of Realtors®.
In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will help as many as 500,000 people refinance their loans and could help reduce foreclosures by as much as 210,000. On top of that, more than 300,000 additional home sales could be generated.
In the end, these higher loan limits alone can be expected to reduce housing inventories and strengthen home prices by two to three percentage points, according to NAR.
Consult the Government Affairs section of Realtor.org -- http://www.realtor.org/gapublic.nsf/pages/economic_stimulus -- for specifics on the economic stimulus package, including a chart of the new loan limits by metro area]
So join the fight against irrational pessimism - take a look at your local housing market and think, just think, of the possibilities.
