Realtors have been forecasting a perfect storm in recent months, and it looks like the waves are beginning to swell out there. We've seen a trifecta of record home inventories, declining prices, and interest rates hitting record lows.
Now, The NY Times has suggested that the time may be at hand to jump into the housing market. (This was their single most emailed story today) Right now, their focus is on first-time homebuyers.
If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales. Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one.
What we often forget is that first time buyers don't have the luxury of gambling on the market bottom. Once they can afford it, they jump in. They cannot risk losing what may be a fleeting opportunity. Once there is activity at the bottom, upper tiered buyers, who wanted to move years ago, can sell and move on. The next generation of wealth is going to be made here. At the lowest rates in years, some analysts are predicting rampant inflation ignited by all the money being printed to pay for this mess. It's only been about 27 years since 30 year mortgage rates peaked at 18%