Is now a good time to buy?
Apparently many buyers are starting to think so. With mortgage interest rates falling to their lowest recorded levels ever (4.78% on average according to the latest Freddie Mac survey) and the implementation of the new $8,000 first time homebuyer tax credit, Boston real estate market activity is starting to pick up. As I briefly mentioned in my latest Boston condo pricing post, I have been seeing signs recently of a big uptick in market activity after being down throughout the winter.
Now The Boston Globe is reporting just that as well. Some highlights from the article:
In the Boston area last week, 464 sales agreements were signed, a 53 percent increase from the first week in March, according to MLS Property Information Network Inc.
...there are indications that qualified buyers are finally deciding to get off the sidelines. During the third week of March, MassHousing booked a record $25 million in loans...
Mortgage rates also have plunged to historic lows. Nationwide, a 30-year, fixed-rate mortgage averaged 4.78 percent for the week ending April 2, according to
Quotes from first time buyers in the article:
"I wanted to snap something up," said Rehman, a psychiatry resident at Brigham and Women's Hospital in Boston. "It might get lower, but I still feel good about my decision."
John Jamerson Jr., 26, and his wife, Stacey, 24, found that low prices and loan rates combined with tax incentives made the prospect of owning their first home irresistible."The $8,000 credit is definitely huge," said Jamerson.
So market activity is picking up. What does it mean?
Typically the Spring market shows an increase in activity so we could be looking at natural market movement, but there has been a larger increase in buying interest and activity than I expected this year. My Boston condo buyer classes have been packed, traffic to this blog (and my company website) is way up, user registrations on my boston condo search site are way up, and we've been getting a lot more calls for showings of listings for sale like this South End condo and this Beacon Hill townhouse. I suspect we are seeing consumers start to gain a little confidence in making decisions again. And not just in home buying decisions, but even renters looking for apartments in Boston are starting to act again after a slow period over the winter, plus there are reports of more activity throughout many sectors in the economy. Is it the economic stimulus working its way through the economy? Seems like it is, and even though the job picture is still bleak and we aren't out of the woods with the financial companies, there have been some positive economic signals that consumers may be latching on to.
Between lower prices in many areas, mortgage rates below 5%, and the $8000 homebuyer tax credit, there are a lot of incentives to buy a home right now. I still say its too soon to jump for joy and declare that it's a universal "great time to buy" for everybody (actually - there is never a universal great time to buy, its an individual decision), but there certainly are many more opportunities now than there have been in the past few years. But the key thing to repeat again is that the market varies greatly from town to town and even price range to price range within areas. Karl Case (co-founder of the Case/Schiller home price index) mentions that:
"The lower end is where the action is," said Case, a professor of economics at Wellesley College. "They are not finding bargains in Newton, Brookline, and Sudbury."
You can add most of downtown Boston to that list too. Obviously prices are higher in Boston, and as you can see in my downtown Boston condo price report, there has been much more stability over the past few years here vs. some other areas, but nonetheless, even downtown, prices are moderating and providing some good opportunities for savvy buyers (like those we represent of course!). Not unexpectedly given the income limits on the $8000 homebuyer tax credit and the higher rates for jumbo loans (although moderating recently), the bulk of the activity increase recently has been in the lower price brackets in Boston (sub $500K range) since that's where the greatest incentives are. But there also has been more interest across the board for well priced properties - just not as big an increase.
If you've been thinking of buying, but aren't sure if it's the right move yet, my advice would be to really start dipping your toes in the water (maybe even get a little brave and wade in up to your knees!) to see what's out there for you. Don't just jump in knee-jerk style, but start doing your homework and viewing properties. If you find a home or condo that fits in your lifestyle, is affordable for you, and you are planning on staying put for a while, there are good options right now to take advantage of the rates and tax credit incentives. I don't have a crystal ball, but I suspect there will be more than a few people upset with themselves for missing 4% rates when they settle on something in the 6%'s next year or the following year.
What are your thoughts? Comment below!