Great article on why now is the right time to buy! The Lawhead Team would like to share this article from pcmbankers.com.

Click Here to read the entire article: “Top 7 Reasons Why Now Is A Good Time To Buy A House“.

A slow economy offers great opportunities

When you read the news, it may seem that the economy still is not quite back on its feet yet. While the stock market is at record levels and housing prices are rising, many people are still wary over investing in a new property. However, there are some great reasons as to why now is a good time to buy a house.

1. Owning is better than renting

When home prices were plummeting, many owners found themselves “underwater” with their properties falling below their original purchase value. At that time, it made sense to avoid the market and rent rather than buy.

However, market conditions are significantly removed from where they were during the peak of the housing meltdown. With so many people turning to rentals, the supply has not been able to keep up with demand. The basic market fundamentals are pushing up rental prices as a result.

When you consider how much it costs to rent in many areas of the country, it simply makes more sense to buy your own property. In fact, some studies, including one by Trulia.com, show that in the vast majority of regional markets, you will do better paying a monthly mortgage as compared to paying monthly rent.

2. Interest rates are low

The interest rates for mortgages continue to stay at historically low levels. While the Federal Reserve is planning to cut back on its support for such low rates, we should see change occur gradually. What this means is that homebuyers still have time to benefit from rates that are near 50-year lows.

With the housing market beginning to pick up rapidly, rates could climb significantly in the next few years depending on how drastically the Fed rolls back its support. For this reason, smart consumers will see that now is the time to grab an opportunity that they might not see again in their lifetime. The more the economy recovers, the more likely it is that interest rates will rise.

Just a tiny increase in mortgage rates, can cause your monthly payment to rise by a hundred dollars or more in some cases!

Some real estate experts also believe that qualifying for a mortgage may become harder rather than easier in the near future. This may seem difficult to believe given the current tight lending policies, but there are indications that things will get worse.

For example, Fannie Mae and Freddie Mac may be doing less lending in the future forcing consumers to deal with private lenders. If the federal government reduces its backing of the mortgage market, we could see banks and other lenders instituting even stricter lending requirements. Many financial institutions are unable to take on much new risk as they are still dealing with bad debt left over from the last meltdown.

3. Prices are rising or stabilizing

In many regions of the country, home prices have been rising rapidly. While the situation across the nation is still very mixed, in most areas, prices are at least stabilizing. The huge slides we saw during the housing meltdown are likely over, according to most indications.

While some analysts fear that small drops can still occur, most do not think that we will see anything like the sustained damage that started in 2007. Homebuyers can have a good deal of confidence that their investments will remain stable at the least, while in many regions, they can see sharp price gains. To be cautious, you can avoid areas that seem to attract excessive speculation. A recent New York Times article discusses some examples of this trend (http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-house-prices-wall-street-buyers/).

One sign that property speculation is going on is when home prices are rising much faster than the local growth in personal income. Another thing to watch out for is sellers that are “flipping” homes at a rapid rate in a particular area.

4. Homes are cheap to buy in many areas

While prices are high in hot real estate markets, in many areas you can still find very good bargains available. Some regions are just beginning to come out of the housing crisis, and sellers in these areas are eager to find people to buy.

When the sellers outnumber the buyers, you can expect lower prices. Often, these types of conditions allow you to bargain the purchase down from the original listed price. Do not be afraid to play “hardball” if you really want a good deal.

Be patient and firm, and eager sellers may come around to your offer. Housing is more affordable now than at any time since the early 1990s.

Click Here to read 3 more reasons now is the right time to buy a house.

Are you unsure if now is the right time to buy?  Before you look to rent a home, read this article.  It might be a good idea to buy instead of rent for many reasons.

It’s cheaper to buy than rent in almost every major U.S. housing market, and over the long term home prices appear likely to rise substantially. There’s no guarantee, of course, that home prices will escape another dip next year, especially if there’s a recession or any sort of economic slowdown. And it may take some time for real estate prices to recover fully.

In addition, not everyone who might want to buy today will be able to get a mortgage. But for people who can afford to buy a home and expect to stay in it for at least a decade, there’s a compelling argument that the current housing market offers an exceptional opportunity.

• Buying a home right now is cheaper than renting. Both home prices and rents have risen a little bit from their post-recession lows, but rents are up more. Mortgage rates are at their lowest levels in more than half a century. And given current prices and tax benefits, owning a home is cheaper than renting in almost every major U.S. housing market.
• The mortgage interest deduction is unlikely to be eliminated. Comprehensive tax reform schemes often call for curtailing the income tax deduction for mortgage interest. That’s understandable, since the tax benefit costs the government $80 billion to $100 billion a year that could be used instead to reduce overall tax rates.
• Home prices are very cheap but appear to be past a bottom. On a national basis, home prices are down more than 30% from their 2007 peak. Since the recession ended prices have recovered only a bit – the best one can say is that they aren’t getting any worse.
• Eventual economic recovery will almost certainly boost housing prices. Following the recessions of 1973-75 and 1981-82, home prices rose by about 20% in real terms (i.e., not counting price increases from inflation) within seven years or less. The drop in home prices in the most recent recession was at least four times as large as the declines in those two previous recessions. As a result, the recovery is taking longer to get going, but the eventual rebound could be proportionately greater. Price increases resulting from inflation would be on top of those real gains.
• A substantial amount of inflation seems likely at some point. Since 2008, Fed policies aimed at revving up the economy have more than tripled the basic money supply (including currency but excluding checking and savings accounts). In a simplistic sense, that means the potential exists for the dollar to lose up to two-thirds of its value. The reality is more complex, of course, and inflation pressures won’t begin to build until people and businesses feel free to start spending the excess cash they have. But as the recovery proceeds and spending picks up, the recent increases in the amount of money outstanding could begin to cause quite substantial inflation. To prevent that, the Fed would have to drain much of money that it has added over the past three years. And that would be difficult to do quickly, because it would risk jacking up interest rates to a level high enough to cause another recession.

In short, since owning a home is typically cheaper than renting after tax benefits are considered, today’s buyers would come out ahead unless housing prices fall substantially. In fact, though, prices figure to rise, either because of an economic recovery or because of inflation (or more likely, both). Yet while buying a home today is a safer bet than it was before the recession, most people are more hesitant to buy a home today than they were five years ago.

If you would like to start looking at the market to buy, call up The Lawhead Team.

A few years ago home ownership was a much scarier concept because of the mortgage crises and economic meltdown leaving many homeowners under water.  But hold on just a minute, the great American dream of owning a home is making a comeback and it is the time to buy.

Reports show that in many parts of the country rents are rising while housing prices are falling which makes home buying more affordable.

Here are some benefits to owning rather than renting:

Forced Savings – When paying your mortgage, homeowners are putting money away into their house which they own, instead of paying for someone else’s mortgage if they were to rent.  If you sell your home and your home is worth more than when you bought it, there is a good chance you will walk away cash in your pocket from equity of the home.

Second Line Of Income – If you have a separate entrance, extra driveway space, etc, you can rent that area out.  In some areas, homeowners even rent out small patches of grass for people who want to grow vegetables.

Energy Efficiency – There are many ways you can make low cost improvements within your home to save on monthly utility bills when you buy.  You can add solar panels, install an energy efficient roof or upgrade your air conditioning unit to save overall in utility bills.

Customize Your Area – No need to get approval from your landlord to knock down a wall and make a larger master bedroom.  When owning your home, you have the freedom to do whatever you’d like to change and improve your home.

No Landlord – Sometimes when renting the landlord may be forced to evict you should he sell the home, rent to someone else or otherwise end the lease.  If you have a fixed income, in particular, homeownership is the way to go, especially if you plan to stick around for a while in that area.

Ready to buy your new home?  Contact The Lawhead Team to get started!

There is a lot of focus lately regarding the fact that it is less expensive to buy your home rather than rent in San Diego county.

In San Diego Country it now makes more sense to buy your home than rent one for monetary reasons.  We’d like to share this article from the Business Insider:

Southern California Housing Market

In the areas around San Diego, the all-in cost of renting a house is more expensive than buying a house.North County Times (via Calculated Risk):Monthly payments on a house are now cheaper than monthly rents on a similar house in most of North San Diego and Southwest Riverside counties, according to an analysis of county-supplied and Realtor data by the North County Times….”I don’t think this has ever happened before,” said G.U. Krueger, a principal economist for HousingEcon.com. “It’s a function of the huge housing price collapse which has left a lot of people in the lurch.”Or, as Carlsbad real estate agent Tyson Lund put it: “This is crazy.”

This inversion of the costs of renting and buying a house is something that’s garnered a fair amount of buzz over the last several months.

Warren Buffett has called buying distressed properties, and renting them out his #1 business idea.

In a recent interview, Paul McCulley said he was intrigued by Southern California real estate, in part because it’s so out of favor..

One think to think about, however, is that if a homebuyer assumes that the value of said home will continue to fall after purchase (a reasonable assumption, given that the direction of housing still appears to be going down) then it makes perfect sense that rent would be more expensive, since the homedweller is not risking a monthly loss of equity.

Meanwhile, other measures of housing affordability, such as the NAR’s index that compares the price of a home to income is surging off the charts.

Of course, a major impediment to a housing rebound is credit and mortgage availability.

A lot of people who are renters can’t make the jump to homeownership since they can’t get a mortgage.

As this recent chart from Nomura showed, inability to get a mortgage is a growing reason why realtors are seeing deals fall through.

Nomura

But as the jobs market starts to creep back — something that is happening the fastest in these ex-bubble areas — this impediment should begin to dissipate.

It is a crazy scenario – it is less expensive to buy a home than rent.