Is Now A Good Time To Buy A New Home?

2012-02-12T00:39:00.000-08:00

The past three years have been full of nothing but bad news for the housing market. Builders, investors, and homeowners have lost billions of dollars as demand for homes has dried up and real estate values plummeted. For anyone thinking about buying a new home, however, all the negativity translates into an historic opportunity.

Southern California's Inland Empire was one of the hottest markets during the real estate boom leading up to the crash of 2008. As the incredible demand outpaced available properties, many were able to "flip" a recently-purchased home, selling it for up to twice its purchase price in a matter of months. But since the bubble burst, the Inland Empire has also been one of the regions most affected by the downturn, along with parts of Florida, Nevada, Arizona, and Utah. These areas that were on fire during the pre-2008 market now find themselves with a record number of foreclosures and bank-owned properties. And the sale of new homes has all but completely stopped.

In fact, 2011 was the worst year on record (since 1963) for new single-family home sales with an estimated total of only 302,000 being sold in the United States [esa.doc.gov]. This trend seems to be continuing into the first few months of 2012 as mortgage applications remain down, according to the Mortgage Bankers Association's Weekly Application Survey, while refinancing applications have been up in every single state. Numbers for new home sales in Inland Empire counties has been hard to find online but, according to DataQuick, Rancho Cucamonga had 152 total home sales in December of 2011. It was not specified how many of those were new homes, although nationally new home sales account for less than 10% of total sales on average. When I find that information, I'll be sure to post it.

For economists, legislators, and many of us throughout the country these numbers do not inspire any kind of confidence in the U.S. economy and maybe even serve as a reminder of the terrible damage done to your finances over the past few years of this Great Recession. But for anyone thinking about buying a new home, this is good news.

With several recent economic signals that have many experts pointing to the bottom of the housing market crash, this may not only be a good time to buy a new home, but the best time in a very long time to buy a new home. Interest rates continue to remain very low and, although the Federal Reserve has signalled that it will keep its short term rates near 0 percent through 2014, the recent downtick in unemployment claims has some pointing to an economic recovery. More jobs, some say, is the key to an improved real estate market.

So why is now a good time to buy a new home? A healed market means higher home values and interest rates back up to their normal levels. If the real estate market is poised for a comeback this year may be your last chance in a long time, maybe in your lifetime, to take advantage of some unprecedented opportunities. And even if the housing market remains in a slump into the foreseeable future, when you buy a new home you don't lose out.

Most of us think of real estate as a financial investment - and it can be - but it is also an investment in your quality of life. A home can be a safe place to raise your family and escape from the stress of your job and other pressures. It can be a place where you do things the way you want, make improvements and not have to answer to landlords or apartment policies. While we all hope to eventually sell our home for more than we paid, its value must also be calculated in terms of use and enjoyment while you live there. There are a lot of great deals right now on distressed properties (bank-owned, short sales, etc.) in the Inland Empire, but there is something special about making a new home your own and being the first and only one to occupy its rooms. There are also no stains to clean, carpets to replace, or walls to paint in a new home. No strange odors or immediate repairs that need attention. You can also order amenities of your choice and have them installed before you move in. These and other less-tangibles make a new home very appealing.

While the demand for new homes remains low and as they compete with more affordably-priced resale homes and foreclosures, builders are offering incentives to entice buyers to their communities. (Contact me for specifics of local builders in Rancho Cucamonga). Interest rates are at their lowest levels in 30+ years and there are many great places to make your home in the Inland Empire, especially Rancho Cucamonga. If you are considering a move to this area or thinking about buying a home, consider buying a new home. It's at least worth a look.

RELATED:

- Wisconsin builder and real estate agent David Belman has a similar article on his blog and gives 10 specific points about why now is a good time to build or buy a new home. [article]

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Is Now A Good Time To Buy A New Home?

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