Is Now The Time To Buy Your New Home?

If you've read my past few posts you might think I’m in a bit of a pessimist. You couldn't be more wrong. I think that we will look back at 2013 as “the turnaround” year we have all been waiting for. Yes, I know about the Fiscal Cliff, the Debt Limit and all the rest but when you look at the job numbers, the stock market and the money sitting on the sideline waiting for a place to park it’s hard to imagine that the economy is not ready to really move forward at a faster pace this year. Construction jobs are up and with the spring coming and at least 50 billion dollars ready to rebuild the northeast this may be the tipping point. Add to that the fact that with mortgage rates as low as they are and the market betting that they will go up, making those who have been waiting to now jump into the market combined with an increase in sales prices in most places now is the time to buy.

One of the most common effects of the business cycle is that we tend to be in the recovery stage long before anyone realizes it. Although most economists believe we are in recovery, all agree it’s been very anemic. Now we can see that the job market has expanded and although the unemployment rate has remained in the 7.7%-7.8% range for a few months the number of jobs created has continued to go up and those jobs are beginning to show up where we need them, in construction.

As of November 2012 we can see that the number of homes for sale dropped by almost 20% from the same time the year before and the number of pending sales increasing each year since 2010, exactly the trend needed to end this recession. The combination of less inventory, more home sales, the lowest mortgage rate in years and an increase in construction jobs will lead to a great 2013.


While the banking system has gone through a number of regulatory corrections and lending requirements have become more stringent I have no doubt that all those buyers who have been waiting will find, by mid 2013 that the prices have gone up. Once those sales have become statistics, the train will get moving faster. Right now existing home prices are still lower than the cost of new construction and as less inventory is available, new home sales will tell the story.

As a member of the National Association of Home Builders I can tell you that most builders understand that the next decade of buyers will be looking for a smaller (1700-2200 square feet), more energy efficient home. Once these new homes have become the norm the value of the larger, older homes will fill out the market and make many more options available to purchasers. With more cash down the markets will be more stable than in the past and you will know I am correct in this optimism when banks again get more aggressive by the end of the year.

If you are not in the market to buy, sit back and watch, but if you have been thinking have we hit the bottom, the answer is YES. Jump in now. A year from today you will be bragging about what you paid for your new home. Below is a graph showing today's sales prices are almost exactly back where they were in 2005. They won’t be here very long. Take advantage.