Consider the Benefits to Buying a Home in Slow Real Estate Market

The housing market has seen better days. Therefore, sellers should be worried, right? No one will go near a Florida home loan until prices have been straightened out, correct? Perhaps. Or maybe buyers will return shortly because there are still numerous benefits to home ownership, even in the current state of things.

A declining market, an investing opportunity

Across the nation, appreciation is slowing down from the rapid pace of the past few years. Florida home loan rates are on their way up. Nevertheless, it could still be a good time to be thinking about investing in a home. Just make sure it’s one you plan on residing in for years.

“Owning a home is still financially not a bad deal, as long as you have the income to support the cost of homeownership,” said Jim Gaines, research economist for the Real Estate Center at Texas A&M University. Another caveat: “You better figure on living there five or six years to make any kind of profit on the thing.”

Investors who hope to profit quickly on home sales, known as property flippers, for the most part have been quiet recently, said Raymond Sierka Jr., vice president and regional sales manager with Harris Private Bank. It’s just too risky for them at the moment.

But not for typical folks. People now are “buying for the right reasons,” said Diana Bull, a Realtor in Santa Barbara, Calif., and a regional vice president for the National Association of Realtors. Sellers no longer hold all the cards, she said, which is creating a more balanced market. Buyers can hold out for the perfect Florida home loan.

Let’s delve into several benefits of home shopping in a cooling real estate market:

More selection

In a growing number of local markets, buyers have more time to think about a home before they make a decision on whether to purchase it. Last year, that often wasn’t a likely luxury, as individuals were forced to make a choice about applying for a Florida home loan almost right away.

“Once you as a potential buyer found a house that met your needs, you had to jump on it right away,” said Frank Nothaft, chief economist for Freddie Mac. “One thing that we’re seeing nowadays - compared to six or 12 months ago - is many markets where homes are staying on the market longer.”

More room to negotiate

Current conditions in many markets also afford consumers a better opportunity to negotiate. In fact, receiving a fair deal is even more of a priority for homeowners who can no longer bank on high appreciation rates to save them if they pay too much.

Average home value appreciation nationwide should be around 7% for the year; and is predicted to slow even further to 6.2% in 2007, according to Freddie Mac. Local markets vary, however, and even as some markets are cooling, others are still on an upward climb.

Even if a buyer has the benefit of being more of a haggler than you could have been last year, still remember to look for a place that meets your needs and your budget. Do the calculations and lay the groundwork before your house hunt ever begins. Make sure you can actually afford a home purchase.

Florida home loan rates are still relatively low

It’s easy to get caught up in the rise of mortgage interest rates. But take the northward movement with a grain of financial salt. Interest rates are still way below what they were five or six years ago. Even if the 30-year Florida home loan rate hits 7% by the end of the year, investors should keep in mind the double-digit rates from years past.

The annual average for a 30-year fixed-rate mortgage was 16.63% in 1981, and worked its way down to 9.25% in 1991, according to Freddie Mac records. Yes, you are reading that correctly.

A home is still a good investment

So don’t go run out and apply for a handful of Florida home loans. However, if you’re in it for the long haul - that is, buying a home with the intention to live in it for years - a house is still a decent investment.

Consider this piece of information from the National Association of Realtors: Since record keeping began in 1968, the national median home price has risen every year. In a balanced market, home values typically rise at the general rate of inflation plus 1.5 percentage points. That’s to say nothing of the tax benefits that come with owning your own home.

It’s certainly something to consider.