Families Shouldn't Overlook Home Buying Opportunities
By Eric Belsky
With so many headlines about record foreclosures and recent house price declines, some are wondering if homeownership is the right choice for them.
Studies suggest that the decision to buy a home is often made in part by looking at the recent trend in house prices and extrapolating into the future. Just as this led many to buy near the top, it could discourage some from buying close to the bottom of home prices in their area. This would be unfortunate.
Many observers suggest that home prices are at or near the end of their price declines. In areas where house prices have fallen a great deal and are showing signs of stabilizing or moving up, now may be a good time to buy. This could mean getting in at or near the bottom in many markets.
In addition, interest rates are at historic lows and, through the spring buying season of 2010, a tax credit is available to first-time buyers as well as repeat buyers who have been in their homes for at least five years. Therefore, home sales are increasing nationally despite gloomy economic news and high unemployment.
For their part, policy makers are pondering what to do about a proliferation of foreclosed two- to four-unit rental properties. Many people who lose their homes to foreclosure will have a hard time getting a mortgage and could be interested in renting apartments in these small rental complexes. Policy makers should consider ways to help real estate companies aggregate such properties. Managing these properties can be challenging, and larger firms may have expertise that small rental property owners can learn from. This could result in fewer small rental properties ending up in foreclosure again.
Helping families think through how to make choices about homeownership is important and involves recognizing both the potential rewards and risks of owning. Given careful consideration, families can make decisions likely to benefit them, and policy makers can work towards viable solutions even during challenging economic times.
Eric Belsky is exectuive director of the Joint Center for Housing Studies at Harvard University.