Wall Street Journal Weighs In on Why It's Time to Buy

The Wall Street Journal headlines: Why It’s Time to Buy. As the Journal put it, “The clouds haven’t quite parted, but the long-term case for home ownership is looking stronger.”

Journal reporters Ruth Simon and Jessica Silver-Greenberg researched and wrote one of the most thorough and rationally analyzed articles in quite some time. Yes, they acknowledged the economic headwinds facing the market and the clouds overhead. But they also spent a great deal of time arguing the positives for buyers today as well as the long-term investment opportunities.

“Despite all the gloom…there are growing indications that it is a good time to buy,” the Journal reporters noted. “Mortgage rates, which fell to 4.55%...are near 50-year lows. Homes have become more affordable than they have been in years. According to Moody's Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer's market. There were about 15 million vacant homes in the U.S. last year—some 3.1 million more than normal.”

Simon and Silver-Greenberg then said what Realtors have been telling clients: “Such conditions might not last long,” they warned. “Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as "household formation"—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.”

In their analysis, the Journal reporters looked at several financial and psychological aspects of the market and determined that the winds are shifting:

·       Lending: “As rates hover near historic lows, experts expect banks to ease borrowing standards over time;

·       Psychology: If prices stabilize, it could tip the balance away from fear and pull more buyers back into the market;

·       Affordability: In several markets, it's becoming cheaper to own than to rent;

·       Demographics: The rate of "household formation" is expected to climb in coming years;

·       Employment: The strength of the housing recovery depends on job growth. Despite some hiccups, the job market is improving in most parts of the country;

For more detail on the current market and the opportunities for buyers right now, read the Journal article at http://online.wsj.com/Why Now's the Time to Buy.html