Thursday, February 23, 2012

Clearing the Hurdle: Is It Time to Buy?

Researchers from several universities have just completed a paper that looks at what they call the hurdle rate. This is the point at which it’s equally smart to rent or buy if your only criterion is to build wealth. Based on today’s hurdle rate, it’s a better time to buy than to rent, because you can build more wealth owning than renting. You can read the article here. (I promise it is short.)

There are a lot of opinions about the housing market out there and without a crystal ball it is hard to know which of them are accurate, but there are a few facts you can focus on. Housing affordability rose to a record high during the fourth quarter of 2011, which means a home buyer’s purchasing power is greater than it ever has been before, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

The index showed that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, according to the index. That marks the highest percentage recorded in the index’s 20-year history.

Despite the positive news in affordabiltiy, many potential buyers are having a difficult time securing a loan because of increased loan restrictions, despite record low interest rates. If you are thinking about buying but are convinced you can't qualify give me a call. There really are still some great programs out there!

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