Reassuring Buyers in this Market

In unsettling economic times such as these, it is not unusual for home buyers to overanalyze market data and their home purchase decision to the point of being paralyzed with information overload or pure anxiety. The failure of several banks and financial services firms, the placement of Fannie Mae and Freddie Mac into conservatorship, and the volatility on Wall Street combined with uncertainty surrounding the presidential election only complicate matters for consumers.

As a result, many prospective buyers are sitting on the sidelines, despite the fact that current conditions within the residential real estate market are very favorable for those looking to enter into homeownership. To be sure, home prices are substantially more affordable than they were 2-3 years ago, and mortgage interest rates remain near historic lows. In addition, new, higher FHA loan limits and a $7,500 home buyer tax credit approved as part of the Housing and Economic Recovery Act of 2008 have effectively reduced the down payment hurdle for homeownership, especially for entry-level buyers. Finally, the increased capital for mortgage lending that will become available with the federal government's takeover of Fannie Mae and Freddie Mac should make it easier to obtain home financing in the months ahead.