Now is an excellent time to invest in a new home - one of the best times in almost a decade. And before you ask... yes, I read the economics section. I’ve recently filled up a 20-gallon gas tank. And I know the price of milk and bread.

But if you’re wondering whether to buy today or wait to get a better deal, I think the time to act may very well be now. And here’s why:

• I believe home prices are at or near the bottom.
• If mortgage rates rise, and I think they will, monthly payments may soon be higher even if your purchase price is lower.
• Inventory is starting to shrink, making it harder to find the home you want – and causing sellers to take incentives off the table.

Not acting soon might well be the biggest risk you could take.


Not all the financial news is negative.

I understand all too well that consumer confidence is low. Many people are afraid to make a move at all. There’s also a notion that home prices will continue to drop, so many consumers have a wait-and-see attitude.

But current interest rates are extremely attractive. And it’s by no means certain that prices will go lower.

If you look closely at activity in the greater Reno market, I think we’re near the bottom of home prices. During the last few months, the velocity of sales and pending sales has significantly increased.

The peak of the downturn was the third quarter of 2005. Between 2004 and 2007, new homes prices fell by about 52% and resales by 42%; during the same period, average values fell by 20%. Since February of 2008, however, both resales and new home sales have been getting progressively stronger, when you consider the number of units sold each month compared to prior months.

Just weeks ago, another report indicated that homes in the greater Reno market were “fairly priced” for the first time since 2004. That report has been echoed nationally, setting the stage for improved sales.


Buying for less, but paying more?

The recent upturn in sales nationwide, however, is due in part to the Federal Reserve lowering prime lending. In order to kick-start sales, the Fed lowered interest rates from 7 to 6 percent. This adjustment was good for home sales, but accelerated the general rate of inflation. There has to be a correction.

What happens if prices slide a bit further, but interest rates go up? You could end up buying for less, but paying more.

If rates go up even one percent, you can expect to pay $65 more per month for every $100,000 you borrow. In other words:

A $250,000 Home Mortgage
@6% = $1,449/mo.

Even if prices decline (and I personally don’t think they will, because we’ve already experienced drastic reductions), you’re not saving any money if rates go up at the same time.


What’s out there?

Will the home you want be available? There’s still a good inventory from foreclosures, resale and new homes. But we’re closer to normal levels. And with the increased velocity of pending sales during the last few months, that inventory is being snapped up at a faster rate.

The same is happening in Northern California, where a lot of our buyers come from.

Buyers with a household income of $75,000 can apply for an FHA mortgage loan and afford a lot of home. Many are starting to recognize that.

And buyers in the higher brackets, looking to build a custom home, can afford more home now as well. With construction down over the past few years, construction costs are lower. Insurance costs are lower. And lower home prices mean lower property taxes, so gains are multiplied.


Why Now?

I believe there are five reasons that now is the time to buy in the greater Reno area.

1. Affordability and stability. After a period of 30% increases, home prices are more back to normal.
2. Mortgage rate increases could leave you paying more in the near future.
3. The increasing velocity of sales will continue to shrink inventory.
4. Home ownership has always been an excellent long-term investment; this is truer than ever, as speculators and short-term investors have left the market.
5. Reno continues to be one of the nation’s most family-friendly cities, with less traffic, lower crime and no smog.

With all that in our favor, why wait?