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Is now the right time to buy a home?


There is no way to answer your question with certainty, and not just because markets are unpredictable. Two broad factors need to be considered to determine whether you should buy a home. One is conditions in the housing market. The other is conditions in your own life. Is your employment outlook stable enough for such a long-term commitment? Have you saved enough for a down payment to encourage a bank to give you a mortgage at a favorable interest rate and, in turn, leave you with easily manageable monthly payments?
You didn’t mention your circumstances in the question, so let’s skip to the housing market, which has yet to show signs of a meaningful recovery. An index of nationwide home prices peaked in 2006 and continues to decline, recently reaching its lowest level since 2003. The pitiful performance is occurring despite multi-decade lows in mortgage rates and signs for several months that employment conditions are improving.
The good news is that inventories of unsold homes have declined and that banks continue to bounce back from the crisis that left them with many billions of dollars of bad debts and foreclosed properties on their books. As they continue to rebound, they should become more inclined to lend, supporting home prices. And, of course, the severe downturn has made more homes affordable to more people. Assuming that the stabilization of the financial system and economy continue, the housing market should do the same. If your own finances and job situation are in order, you might want to start looking around for something to buy.
-Conrad de Aenlle