Best Time to Buy Homes in Four Years
Date Added: March 05, 2008 05:15:45 PM
Current real estate conditions have created the best time to purchase a home in over four years.
Current real estate conditions have created the best time to purchase a home in over four years.The rapid and steep decline in home prices so far has caused the valuations to dip to levels that have not been seen since 2004. Valuations are the difference between the actual prices of a home versus what the home should cost.
Global Insight and the National City Corp bank revealed through financial analysis that over 88% of the 330 housing markets have shown improved affordability due to declines in pricing over the final three months or 2007.
Richard Dekaser who is National City’s chief economist said that “Housing valuations are almost back to long term norms.” And current measures of affordability are “the best in the last four years.” He also had a word of caution saying that home prices could fall even further.
He is quoted as saying “This isn’t to say home price declines are over.” And “We could move below historic norms. By the end of 2008, housing markets could be broadly under-valued.”
Of the housing markets surveyed 21 of those or 6% were still very over-valued. Including places like Madera, California and Atlantic City. Those marks have decreased from a total of 56 over-valued markets in 2006 when the bubble was at its peak.
The information covered in the report is a comparison of what home values should be based upon density of population versus the actual median home prices with adjustments made for interest rates and relative levels of income, past premiums or discounts based upon historical market activity all to conclude where a market is over or under-valued.
A few additional things that were factored into the report were any intangibles for an area that makes it a more desirable and therefore more expensive area to live. Dekaser says that “Declines are no longer confined to once-frothy markets.”
Dekaser also made sure to point out that the report covered the home valuations for the final three months of 2007 and there are many reasons which indicate the market has pushed to even more favorable valuations now.
2008 has brought with it additional pricing declines in addition to the continuation of lower interest rates, though they have trended up slightly as of late. Other factors that have changed the market landscape are increases in wages with personal income rising .5% in December and an increase in foreclosures adding more housing units to the market to further depress home values.
Some of the larger gains in affordability have come from markets where foreclosures have hit hardest including Florida, Michigan and California. These three states currently have 43 of the 50 largest declines in pricing.
Topping the list of over-valued markets is Bend, Oregon where homes are evaluated as being as much as 59% over the fair market value. Another over-valued area is Miami, Florida where in spite of a price decline of 5.7% last year is still considered over-valued by as much as 44%.
So where can you find the bargains? The best areas for under-valued properties were found in Texas and Louisiana. Dallas was found to be undervalued by 30% and housing in Houma, La was found to be under-valued by 31.2%.
March 5, 2008
