Are we at the Bottom??

Are we at the bottom?

I get that question almost every day. My answer is always, “I don’t know”. It’s impossible to gauge or tell when or where the bottom is. But if we imagine this market like a valley, we’re definitely in the “valley”. Whether were heading down further or on our way back up, time will tell. Personally I think we are heading down further….does that mean we shouldn’t buy right now? Should wait until that mysterious alluring “rock bottom status”? I say no. As an investor, you’re going to buy if the property pencils….that’s easy. But as an “owner occupying” homebuyer or first time buyer, how do you know if you should be buying right now?

Here’s why I believe you should be buying right now:

We’re in a “perfect storm” situation for future homeowners looking to get into the market. Rarely do we have this combination of buyer incentives all at once:

Low home prices. Today 50% of San Diegans can afford the median home price but just 3 years ago only 9% of SD could afford a home.

Incredibly low interest rates. With 30 year fixed rates staying in the high 4’s to low 5s and no big swings in the market, buyers can enjoy low fixed rates to help them afford more house.

Sellers, including REOs, are paying closing costs. Right now sellers are still paying closing costs. Sellers are willing to do this because of they need to sell. But as more buyers come out they won’t be forced to cough up the extra money to pay the buyer’s costs.

Tax Credits! Right now if you buy before December 1st, 2009 you can be eligible for an $8000 tax credit. A dollar for dollar tax credit. And, unlike 2008’s version this one does not have to be paid back. But you have to close before December. California is offering a $10k tax credit for new homes. That credit has certain allotted funds set aside and they are already 25% used.

It’s true we may see prices drop more this year. But the buyers are coming out! A lot of buyers that were on the fence, watching the market, are now jumping in and writing offers. The amount of clients, that I have pre-approved, and are now actively shopping and getting out bid or receiving counter offers is increasing. And as more buyers come out; the “deals” out there are going to see activity. (A Realtor in your area could advise you further, but from what I’m seeing if something is priced well its selling.)

If you are planning on living in the home, then I say, go for it. As long as you can afford the payments each month and love the home don’t let the possibility of prices dropping stop you from jumping in. Over the long term the home values will come back. So unless you’re your going re-sell it next year…I wouldn’t be afraid of not being at the “very rock bottom” of this market. There’s plenty of inventory out there and plenty more that’s going to hit the market soon. So we’re a ways off from seeing this market turning around. But with the amount of buyer incentives available today, there’s no reason to wait! The low interest rates alone may offset a price decline. Not to mention the additional tax incentives available now.

What do you think? Are you shopping right now? Tell me your experiences and the area you are looking in.