In last week’s blog, I asked that question and then provided the issues facing a buyer, without supplying a firm answer. So let me directly answer my own question this week.
YES, I say emphatically, now is indeed an excellent time to buy a house in this country. Seldom in the last fifty years has a potential homebuyer been given the opportunity to take advantage simultaneously of both low prices in houses and low mortgage rates.
Under “normal” conditions, when housing prices are weak, it is generally during periods of high interest rates. This is logical because the mortgage interest rate is the key variable in determining the monthly mortgage payment. As interest rates rise, a buyer is forced to “trade down” i.e. find a less expensive house because of the cost of financing. The other side of that coin is true also – during periods of low interest rates, the buyers of houses can afford to pay up somewhat because the cost of financing is advantageous.
However, as I noted last week, these are not “normal” times. The glut of housing is keeping prices exceptionally low despite the extremely favorable interest rates that mortgage seekers can obtain.