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When is it really a great time to buy a house?

By: 25 July 2010 One Comment

“It’s a great time to buy a home.”

Have you heard that phrase recently? The chances are good that you have as the National Association of Realtors and other groups have uttered that mantra in response to slowing markets over the past couple of years. That’s no surprise – when’s the last time a real estate agent said it was a bad time to buy a house?

But, is now really a great time to purchase a home?

It certainly is, provided you want to grab a bargain that will likely appreciate in value over the next few years. There are several factors in the current market that make real estate an attractive investment.

For one thing, mortgage rates are ridiculously low right now. How low? The rate on a 30-year, fixed interest mortgage has hovered around 4.5 percent over the past few months – rates haven’t been that low in half a century.

It’s uncertain how long those rates will last, however. What has kept rates low is a lot of private investment in the mortgage-backed securities market. Investors, it seems, looked for safe places to put their money when the credit system in Europe started failing due to defaults and high debt loads.

The mortgage-backed securities market is exactly what it sounds like – mortgages are held in trust as collateral for securities. When investments increase in that market, the yields also drop as the securities are viewed as less risky.

Those lower yields mean lower mortgage interest rates – a very favorable situation for buyers because they can save thousands of dollars over the life of a home loan when rates are down. The question, of course, is how long will those rates stay low?

That’s difficult – if not impossible – to predict. Who knows how long private investors will flock to the mortgage-backed securities market and cause interest rates to remain low?

One thing that’s not a prediction has to do with home prices. Average list prices have declined through the year, meaning buyers can finance homes at low interest rates and may well pay less for them, too.

Some buyers, of course, have been nervous about the future value of their purchases. Bobby Coats – an economist and professor at the University of Arkansas’ Dale Bumpers College of Agriculture & Life Sciences in Little Rock – predicts that home prices will remain low over the next two to five years and then increase after that.

Homes that are purchased today will probably be worth more money by the time the buyers get ready to move out of them. Considering that people generally purchase homes to live in for at least a few years, the prospect of long term gains in value is appealing, indeed.

Finally, a lot has been said of late about the availability of credit. Rumor has it that getting a mortgage is considerably more difficult now than it was just a few years ago.

While there is some truth to that, lenders are still making loans. The best way to find out what mortgage options you have is to visit with a lender. You might be pleasantly surprised about what is available to you.


Home Sweet Home is written by Ethan C. Nobles and is distributed weekly by the Mortgage Bankers Association of Arkansas.

About: Ethan C. Nobles:
Benton resident. Rogue journalist. Recovering attorney. Email =

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