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Real estate and Palm Harbor: Is this the best market for buyers ever?

If I were to ask you to describe your income, would you use words like “reliable,” “dependable,” or “steady?”  Do you think there’s a very good chance that your job (or your business) will be around in a year, or two, or five?

If you took out some sort of loan tomorrow, would you worry about your ability to pay it back because of future income issues? Or would you be confident that your job would remain in place over the long term?

Some people have jobs that pay really well, but which probably won’t be around for long periods.  I’ll give you an example: I have a relative who is working right now as an electrical contractor in Iraq. He’s making REALLY good money, but he doesn’t expect (or want) the job to last forever. After a year or so, he’s going to want to shake the sand out of his jeans, come back to the States, and resume a more normal life.

My relative’s big but short-term income puts him in a great position to pay off debt and accumulate cash. However, it does NOT make him a great candidate for a 30-year mortgage or a five-year car loan.

But YOU, on the other hand, might be sitting on a bigger asset than you realize, if you have a steady and dependable job or other source of income.

Why? Because this may be the best time in the past, oh, 75 years or so, to buy a house.

Which brings me to my second question:

Do you know what the S&P/Case-Shiller Home Price Indices is? Okay, I’ll tell you – it is a monthly report that measures the residential housing market. It tracks home values in 20 metro markets in the U.S.

And the Case-Shiller report for October, released just this week, shows a couple of things: 1. Home values in October were flat, and 2. in spite of that, home values during 2009 have generally been in slow but steady recovery mode.

Case-Shiller reports that home values have fallen a full 30% since their peak in 2005. That drop has been stunning – nothing like it has been seen since the Depression, and perhaps even earlier than that. For people who need or want a new home, it is an opportunity of stunning proportions.

And there is even more good news; interest rates have dropped, too, If you wanted a 30-year fixed rate mortgage three years ago, it would have likely cost you around 6.4 percent. Apply for that same mortgage today, and you’ll pay more like 5 percent.

What that means is that median home prices are now about where they were in the mid-1990s, a time when just about every agrees was a really great time to buy. What makes the current conditions even more attractive than then, however, is the difference in mortgage rates – something like 5 percent now, more like 9 percent back then.   

The Wall Street JOURNAL recently did some numbers-crunching, and came up with this conclusion: Buy an average home now, finance it with a 5 percent 30-year mortgage, and the cost comes out to be around 19 times today’s average weekly earnings. Conditions haven’t been that favorable for homebuyers since the 1970s, according to the JOURNAL.

Still not good enough for you? Okay, fine – then throw in the $8,000 first time home buyer tax credit, which is scheduled to run through the spring season.

Which brings us back to my original question: How would you characterize your income? Would you describe it as “reliable,” “dependable,” or “steady?”

If it is, and you can feel pretty good about relying on your income over the long term, this is probably the best time to buy a home that has come along during your entire lifetime, and probably your parents’ lifetime, and maybe even your grandparents’ lifetime as well.

The real question is the reliability of your income. These are uncertain economic times, and no one needs additional uncertainty in times like these. Unstable or unreliable income down the road could result in a foreclosure, no matter how attractive the selling price of the home is now.

But if income unreliability is not a major concern, unprecedented real estate opportunities await you.

Tags: pinellas, real estate and clearwater, real estate and palm harbor

This entry was posted on Tuesday, December 29th, 2009 at 3:28 pm and is filed under Clearwater, First time homebuyers, North Pinellas County, Palm Harbor, home values, pinellas county, real estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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