Frederick County Short Sale Blog | Homes for Sale in Frederick Md

Is It a Good Time to Buy Real Estate in Frederick County?

To buy now, or wait until next year…that’s the question.  We are asked that frequently.  Here are 4 issues, with their pros and cons.

1.       Record Inventories:  With 2300 homes on the market in Frederick County, buyers have a lot to choose from.  There are 9 to 11 homes on the market per every buyer most months and it has been a buyer’s market since 2006.  Sellers are paying significant closing costs and pricing their homes competitively to get them sold in a highly competitive market.  Inventories have been steadily declining since last winter when there was a 16 month inventory in Frederick, to a 9 month inventory today.  We really don’t know what it will be next year.

NAR has forecasted home sales to be sluggish for the remainder of this year and all of 2009, with a return to a normal market in mid-2010.  Many believe it will take that time to sort out the mortgage crisis, get the REO properties liquidated, and free up credit for more buyers.

2.       Interest Rates:  Interest Rates on mortgages remain historically low.  In the 80’s we saw double digit rates, our first mortgage was 10.5%.  We hope that we won’t see double digits again, but even 1% interest will make a huge difference in a monthly payment.   Like inventory, we don’t know what interest rates will be, we’ll have a new administration, and with it a new financial plan that will impact us.

3.       Record Home Prices:   We are seeing home prices fall to 2003 and 2004 levels.  We are working with first-time home buyers in numbers, something we haven’t done in several years because they’ve been priced out of the market.  Homeprices have fallen by the sharpest annal rate ever.  The foreclosures and short sales, which in many neighborhoods make up ½ of the homes on the market, are putting downward pressure on prices.  Although it is unfortunate for those who paid 2006 prices, it is a needed market correction, and the values will eventually recover, even if it takes 5 or 10 years. 

NAR has also forecasted that homes will probably reach 2003 values and bottom out there.   We know that many areas of the country have reached bottom and are experiencing a healthy return to 3 to 6% yearly … We can never clearly say when the bottom of the market has come until after it has come and gone, and we have the statistics in front of us.  We will say, however, that we are seeing an increase in sales, and we’re experiencing properties prices well enough to get multiple offers.  Buyers are deciding that prices are good enough for them.

4.       The most important aspect of the decision to buy or not is a very personal one, what are your goals, what are your lifestyle choices and wishes, and what do you want.  You alone have to answer these questions and choose your path.  One of the aspects of this last housing boom is that it has changed the way people think about buying a home, we believe in a negative, unrealistic way.  At the height of the boom, 40% of home sales in 2005, and 36% in 2006 were 2^nd homes or investment properties, the highest percentage ever.  People have come to see the purchase of a home like they do buying stocks, or other investments, expecting a similar return on their investment.  This has skewed the reasons people have for buying and has added to the boom and bust we’ve experienced.  The main reason to buy a home is to have your own place to live.  Yes, you get a tax write-off, and you will see appreciation, over time, but the thought of making a killing on appreciation is false.  You will make money in appreciation over a long time, but 20% per year was an anomaly.  It was damaging, and now we’re in a correction.

So buying a home has to be part of your overall plan.  If your credit is good, if you have some money for closing cost and down payment, this is a great time to buy a home.

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The Highland Group