With both housing prices and mortgage rates falling, some potential home buyers who have been sitting on the sidelines are beginning to wonder whether it's time to do some serious house hunting. At Bankrate.com, two real estate experts give conflicting opinions.
With both housing prices and mortgage rates falling, some potential home buyers who have been sitting on the sidelines are beginning to wonder whether it’s time to do some serious house hunting. At Bankrate.com, two real estate experts give conflicting opinions.
On the bullish side, the argument is that if you have good credit and plan to stay in the house for the long haul, a further decline in housing prices won’t hurt that much. If you’ve found your dream house, it may be time to buy. The key to this optimism seems to be the time factor—the plan to stay in the home long-term. The housing market may take time to recover, which means your investment in the house may be in the red for several years.
On the flip side, the bearish outlook is that we haven’t seen the worst yet. Home prices, already down as much as 25% in some areas, could decline another 20% or even 40%. Tougher lending standards mean fewer people will have the ability to finance a new home, shrinking the market even further. History also shows that housing prices don’t recover quickly from slumps; it took almost 4 years to get over the last housing downturn in the late 1980’s and early 1990’s, and that slide was not nearly as severe as the current one. One risk of being patient, however, is that mortgage rates will rise, wiping out some of the gain from lower prices.