The housing slump has shown few signs of easing. Yes, there have been a few bright spots: New housing construction rose 22 percent in February, according to the National Association of Home Builders. And the sales of existing single-family homes, condominiums and co-ops rose 5.1 percent in the same month, according to the National Association of Realtors.
Many financial experts and housing analysts, though, suspect that those numbers represent temporary blips. They point to the evidence that the housing market has not dug itself out of its slump just yet: Housing prices in February declined again. And housing sales, despite their uptick in February, were still 4.6 percent lower in the month than they were during February of 2007.
For buyers, though, and especially those who do not have a home of their own to sell, this may actually be good news. This may, in fact, be the perfect time for these buyers to purchase a home.
Housing Affordability on the Rise
While housing sales are down, housing affordability is on the upswing. The numbers bear this out: The national median price of existing homes stood at $165,400 in February, according to the National Association of Realtors. That means that half of the country's home sales came in at a higher price, and half at a lower price.
That figure is significant because it's far less than the national median price of $229,000 that the Realtors association recorded in October of 2005. It's also significantly lower than it was just one year ago.In February of 2007, the median price of an existing home stood at $195,800.
A Big Drop in Housing Price
That drop, from February of 2007 to February of 2008, is a big one, 15.5 percent. That's an amazing decline in just a one-year period, especially considering that historically, housing tends to raise steadily from year to year. The debate now centers on whether home prices have reached the bottom. And that's where life gets confusing for buyers. Yes, buyers can get a great deal on a home today.
But might they be able to get an even better deal one month from now? What about two or three months from now?
How Long Will Housing Prices Fall?
There is a risk, though, in this kind of thinking. There is the chance that the housing market has reached its bottom, and that home prices will begin to rise. If that's the case, those buyers who didn't purchase may cost themselves thousands of dollars.
But price alone isn't the only factor that makes this a strong buyer's market. There's also the fact that a growing number of home sellers are desperate. They've had their homes on the market for months, sometimes a year, and haven't received any good offers. These sellers are willing to negotiate on everything from price to closing dates. They're also more willing to patch that leaky roof or replace that old furnace. Buyers also benefit from the many homes that are on the market. There's more for them to choose. And a high inventory of unsold houses keeps sellers desperate enough to offer lower prices.
It is possible that housing prices will go even lower. But buyers will have to determine if that's a risk they're willing to take.
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