An unprecedented decline in housing values is giving way to a gradual improvement in most depressed real estate markets. This turn-around is likely to affect both selection and price, surprising buyers that have been slow to make a decision. The most important considerations for buyers after three quarters in 2011:

1. Housing Prices– Most experts are predicting that prices are likely to level off during the coming year. All buyers are benefiting from foreclosures that have driven down prices. Many depressed markets in states like California and Florida however, have already begun to see prices increase. Oceanfront homes in some areas have seen dramatic price increases. This could be the bellwether for the rest of the market.
2. New Construction Activity– According to the Case-Shiller index, housing prices have dropped to values in place in 2003. With no appreciation for almost 9 years, it is highly unlikely prices will remain low. Most experts don’t expect prices to drop much further.
3. Interest Rates- The average 30-year fixed interest rate has dropped below 4%. With present U.S. debt obligations, it is unlikely they will stay this low for long. For every 1% increase in interest, the cost to borrowers increases by about $6.00 per month, per $1,000.00 financed.
4. Pent Up Buyer Demand- According to U.S. Census figures, there are roughly 1.2 million households added every year in the United States. With only 600,000 homes being built each year, we are only building half of what is needed to meet growing demand.
5. Selection- The most desirable, competitively priced homes are most often the ones that sell first. Buyers that hesitate are likely to have to accept a less-desirable home.
6. Pre-Season Window of Opportunity– Most markets are typically sluggish in the fourth quarter, with an increase in sales after the holidays. The ideal time to buy is before it becomes active again. If seasonal purchases improve, the window of opportunity is gone.
7. Stock Market– The Dow Jones industrial average recently closed at 11,869, after 4 straight weeks of gains. An increase in investor confidence is a sign things are improving.
8. Quality of Life– With the best prices in over 8 years, and ample selections, it’s a great time for every buyer to ask, “If I were to buy today, what would it mean to me?” And, “If I don’t buy today, what will I lose in terms of quality of life?”
9. Investment Opportunities– A significant drop in prices, credit issues with prospective buyers, and steadily increasing rental rates have once again made real estate desirable to many investors. These trends are expected to continue.
10. Increasing Rental Rates– Rental rates have increased significantly over the past year. With the cost of renting a home increasing, coupled with very low interest rates and mortgage interest deductions, many home occupants are now finding it less expensive to own as compared to renting.