As spring buying season approaches, potential first-time homebuyers would be excused for feeling uneasy about jumping into the real estate market. After all, pretty much all housing news since the bubble burst has been, well, bad news.
But this may be the perfect time for prospective buyers to test the waters.
As of December, home prices had plummeted 34 percent
since the housing bust, according to the S&P Case-Shiller index. That means you could buy a home, on average, for the same price it would have cost in 2002. Along with retro prices, mortgage interest rates continue to hover around record lows
. The rate on a 30-year fixed-rate mortgage was 3.95 percent as of Feb. 23, marking the 12th straight week rates had stayed below 4 percent.
A number of reports corroborate the idea of a housing market whose affordability has reached near-unprecedented heights. The U.S. Department of Housing and Urban development said that homes are more affordable than they've been in 40 years
, while the National Association of Home Builders recently stated that home affordability hit a 20-year high
. The National Association of Realtors President Moe Veissi asserted that the "typical family has roughly double the income needed to purchase a median-priced home," something that's never happened since the NAR started keeping records.
"OK," you may be thinking, "maybe homes are affordable. But what does that matter if prices continue to fall? That loses me money, right?"
There is evidence in several markets that home prices' painful slide may finally be at an end. While home prices reportedly dropped 4.7 percent in 2011
, some experts say prices will bottom out by the end of the year. NAR chief economist Lawrence Yun predicts that prices will actually rise
by 2 percent in 2012.
Another reason to house hunt this year is the abundance of discount deals stemming from distressed sales, which include foreclosures and short sales. On average, they yield a 30 percent discount
compared to conventional sales, according to CoreLogic. And with the $25 billion mortgage settlement
with the nation's biggest mortgage lenders finally on the books, the foreclosure inventory is expected to tick up in 2012
, as lenders look to clear their backlog.
And to top it all off? The economy looks like it's actually on the upswing. The economy added 227,000 jobs in February
, according to the Labor Department. And while qualifying for a mortgage may still be difficult for many buyers, for first-timers who don't have an outstanding mortgage to deal with, this may be a once-in-a-lifetime opportunity.
Follow Teke Wiggin on Twitter (@tkwiggin), follow @AOLRealEstate, or connect with AOL Real Estate on Facebook.
Also see: Top Real Estate Markets for Million-Dollar Homes
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