This may be one of the best times ever to consider the purchase of a home – a first home, a bigger home, a smaller home, a newer home or an investment property. Here are ten points to think about:

1. Long term mortgage rates are down with thirty-year fixed interest rates under 6%. There are no more giveaways; you will need to have good credit, a job with documented income and money for down payment and closing costs but for those that can qualify housing payments are as low as they have ever been.
2. Home selling prices are basically the same as they were three years ago, having increased less than 3% over that period of time. The cost of new home construction has increased substantially over this same period of time so the replacement cost is going up while current prices are flat. Eventually this has to change.
3. There is a current inventory of almost 2,000 homes for sale and with a slower demand over the next six months, this supply / demand ratio is definitely a buyers market. A seller with a home on the market at this time is probably motivated. You can expect the homes to be in good repair and showing condition with little deferred maintenance and they should be very competitively priced. Plus you will not need to rush into a purchase decision because there are not a lot of buyers chasing after the same home.
4. In the higher price ranges – above $300,000, there is a surplus of homes on the market ranging from a one to two year supply. If you are a home owner considering a move up to a more expensive home, this can work in your favor. For example, there is a good demand for homes priced under $300,000. If you want to consider a move up to a home priced above $300,000 you go from a six month supply to a twelve month supply. If you go from $400,000 to $500,000 the supply goes from twelve months to eighteen months.
5. If you are considering investment real estate, there is a very good active rental market available and rental income compared to home value is probably as high as it has ever been. A $200,000 property in good condition may be rented for $1,200 or more per month providing a capitalization (CAP) rate of perhaps 7.5% (less expenses). Plus with real estate you get the leverage on your investment. With $40,000 to can buy $40,000 worth of stock. With the same $40,000 you can buy a $200,000 home. If that home appreciates just 3% per annum it will be worth $230,000 in five years, a 75% return on the $40,000 investment.
6. There is a lot of information available on the internet about the homes for sale. You can do a lot of ‘homework’ from the comfort of your living room. Most listings will have additional photos and virtual tours to take you inside the home. You can get neighborhood and school information and access maps showing the location and where it is in relation to parks and shopping and other information you need.
7. Housing starts are way down. Permits issued in Fort Collins for new single family homes total 161 for the year to date ending July 2008. This is down 30.3% from the same period last year and is on a pace for a total of 240 permits this year compared to 345 last year and 442 in 2006. And most of these homes are pre-sold as builders are unwilling or unable to build ‘spec’ homes. This means that there is very little to choose from in new construction and with a six month time frame from start to finish it is doubtful we are going to see any new construction inventory until at least late next year. So those new homes that are available now provide an opportunity that is dwindling.
8. In addition to motivated sellers you will also find motivated real estate agents who have the time to spend to look after your needs. You can expect them to listen and pay attention and have the time to assist you in finding the right home and making the right decisions with no feeling of being rushed or hurried. And if your current agent is not doing the job you expect, there are many other fully qualified ones ready to take his / her place.
9. The same can be said of mortgage lenders. They are not too busy and will take the time to make sure you get the product and rate that is right for you. And if you have any credit issues they can help to get them fixed.
10. There is every indication that we are at the bottom of the market and at some point prices will start to increase. We are just about through with foreclosures, there are inflationary signs in the economy and with that normally comes higher interest rates, rising commodity prices are increasing the cost of new home construction, there are a lot of potential home buyers and move up buyers still on the fence so there is pent up demand and the sterling reputation of the area for business, retirement and raising a family will bring more home buyers to the area. All of these factors could mean increased demand and higher selling prices in the future.

August brought another big decline in local real estate sales with just 321 homes closed compared to 397 in August last year, a decrease of 19.1%. For the year to date sales are down 14.5% and for the twelve month period that began in September 2007 there have been 3,221 homes sold in the Fort Collins area compared to 3,799 in the previous twelve month period, a decrease of 15.2%.

The average selling price for the month was up 3.4% to $253,243 but this was solely attributable to an 82.4% increase in the average selling price of new home construction. Resale single family home prices were down 6.0% to $249,582 and multi-family home prices were down 9.3% to $156,517. The jump in the average selling price of new construction was due to four home sales at an average price of almost $1.5 million, all of which closed in August and these sales single handedly increased the average selling price from a decrease of 3.0% to an increase of 3.4%. For the month, the median price was off 1.2% to $209,930.

For the year to date the average selling price is showing a 0.3% increase over last year and the median price is down 2.3% to $210,000. The largest category of home sales is resale single family homes which account for 70% of the market. The average selling price for these homes for the year to date is $264,624, a 0.9% increase for the year to date although the median price shows a decrease of 0.7% to $228,500.

The inventory of homes for sale continues to decline with 1,876 active listings on the market, compared to 2,033 last month and 2,079 last year. With the 3,221 homes sold in the last year, the calculated demand is for 264 homes per month so we currently have a seven month supply, just about a balanced market between supply and demand. Because of the low inventory, the marketing times continue to improve with the August closed sales averaging 98 days on market compared to 103 days last month and 110 days for the year to date.

We are now entering the fall season and it is difficult to know what to expect. There were 1,128 closed sales from September to December in 2005, 1,067 in 2006 and the start of the decline in September last year produced just 884 closed sales in the last four months of 2007. If the market continues at a 15% drop, closed sales in the next four months will total around 750 which would equal total sales for the year of less than 3,100. On the other hand, if we can at least equal last years four month total we will exceed 3,200. Either way, the market decline will be considerable when compared to the 4,006 closed sales in 2005, 3,712 in 2006 and 3,615 in 2007. Assuming an average selling price on a par with last year, the total market will be in the range of $800 million, a 15% to 20% decrease over the last three years.

A relatively balanced market between supply and demand, absolutely flat selling prices that have increased just 3% in total over the last three years, motivated sellers and mortgage interest rates below 6% are just some of the reasons that you should be a home owner. If you are undecided, call a real estate professional and at least take a look at the opportunity.