Wednesday, 12 November 2008

Now is a great time to buy a house - prices are down


Now is a great time to buy a house. Prices are down, interest rates are falling and vendors are anxious to sell. The house that you’ve had your eye on for a while is better value now than it’s even been.
Not only that but if you’re looking to trade up from your current home, the price difference between the two is smaller now that ever. So even if the value of your house has fallen, the value of the house you really want has fallen even more, making it even more affordable than ever.
The changed economic climate means that right now buyers have an opportunity not presented in decades and once the market does, recover, which undoubtedly it will, you will look back and smile at the decision you made.
Now that’s one way to look at it. You could also so that right now is a terrible time to buy. Prices might drop even more and if more homes come on the market, will buyers get desperate? The why not wait them out.
The fact is that right here, right now, sellers outnumber buyers. Market sentiment is negative and as a result it can be confusing for buyers, hence they might be inclined to wait a few more months.
“People are worried that they’ll buy too soon and have negative equity by the time the deal is done”. Said Healy Hynes of Hynes Real Estate Alliance.
“What they really need to do is decide if they’re serious about buying, because their concerns are also vendors concerns. The same newspapers are being read and same radio chatter being listened to by both sides.
By getting active about buying, rather than waiting passively for prices to drop even further, you can get ahead of the market, because waiting is exactly what the crowd is doing.
It’s the people who get in first that make the greatest deals in any marketplace. Be it in shares, equity or homes. “By the time the papers are saying the market has recovered and prices are going back up again, the smart buyers will already have made their deals and will be reaping the rewards.” Continued Mr. Hynes.
The questions you need to ask yourself is do you want to be one of the crowd or do you want to be one step ahead of them?
“If you get out there now you can negotiate a much better deal from the anxious vendors that you will if you wait until the papers say the market is picking up, because the vendors are reading the same papers you are and will therefore feel they can negotiate from a stronger position and will be less inclined to deal.”
Mr. Hynes has this analogy to make. "It's like when you find a dress that you really, really like. It’s the right cut, right size and right colour for you, so you wait for it to be on sale. Then the sale starts and they don't have your size. Theoretically, you’ve saved 30% but you don't have your dress! The only difference is in this case you might still get it at the same price."
“Right now is a perfect time to buy, because of a concrete significant and accumulating increase in buying power," says Healy Hynes. Interest rates are lower now than they have been in years and will continue to drop for quite a while yet. And if you’ve been living in your current home for a while, you’ve build up a significant amount of equity, regardless of the state of the current market.”
Mr. Hynes recommends that buyers check out the websites and call the auctioneers to find out exactly what’s on the market right now. By not being aware of what’s out there, the house that you’ve been looking for could be sitting there waiting for you.
Mr. Hynes is particularly pointing his advice to first time buyers and families looking to trade up.
“Historically speaking it’s the investors who are really attuned to getting into the market.” Mr. Hynes pointed out. “They’re the ones who are used to dealing and normally snap up all the bargains when they come available.”
For many years, they were berated for squeezing out other sectors; particularly first time buyers, and steps were taken by the government to address this situation.
According to Mr. Hynes, the market itself has now presented an even better opportunity to homebuyers to get one up, as they say.
“Investors normally use the equity in their portfolio to gear up to buying” said Mr. Hynes “and families release equity by selling their existing homes. The former approach is a lot more costly and as such the families now have an edge which they can use to their significant advantage”.
The one certainty in life is that one side of the market will never stay on top forever. As we all know, it can turn very quickly and a market like this that’s been low for a while is ripe for a comeback as lower prices stimulate investors.
Healy Hynes is a director of Hynes Real Estate Alliance, Athlone and chairman Real Estate Alliance, Ireland’s leading network of qualified property consultants.