Opportunities in a down market

The real estate market is down—that's not news, but what doesn't seem to be reported much is the opportunities that comes with this declining real estate market.

It's certainly more difficult to purchase a home today than it was 18 months ago—job certainty for many people is a think of the past, loans are much harder to come by, and most people have a general sense of fear about the economy—nobody wants to purchase a home that's going to drop in value. We hear it all the time, people are waiting until the market hits bottom.

Buying a home right now isn't for everyone, but there are some great opportunities for those brave enough to wade into the murky waters of our market. Interest rates are amazingly low—in the past 30 days we've seen them from between 4.75% and 5%. Sellers are motivated and there are hundreds of distressed properties available at significant discounts. And for first time home buyers and those who haven't owned a home for the past 3 years, the government is giving away $8,000 in free money as a tax credit for purchasing a home.

Economy.com predicts our market will lose 10% more value over the next 18 months, so it's better to wait, right?

The answer to that question depends on your goals. Economists also predict interest rates will begin to creep up in the second half of 2009. Until recently, 30 year fixed rate mortgages have averaged around 6% from 2002 through 2008, and averaged around 7.5% from 1992 through 2002. So lets assume by June 2010 our market value has dropped 10%, but interest rates have also gone up to 6%, 6.5% or 7%.

A $250,000 purchase today at 4.875% equals a principle and interest payment of $1,323 per month. Next June let's assume you can buy the same home for $225,000 but interest rates have gone up. At 6% your payment is $1,349 per month, at 6.5% the payment is $1,422 and at 7% the payment is $1,497.

Buying a home right now is not for everybody, but according to many economists, Salt Lake County is at or near a point of peak affordability—meaning the combination of low interest rates and lower home prices provides incredible buying power right now.

If you'd like to explore your options then visit this Salt Lake City Homes for Sale website today.