Good time to buy a home, Realtors say

January 27, 1991|By Adriane B. Miller | Adriane B. Miller,Special to The Sun

Economic and war jitters notwithstanding, this is a very good time to buy a home, area real estate representatives maintain.

Realtors and builders say attractive financing options, variety of properties for sale and the willingness of sellers to negotiate deals result in a very favorable climate for homebuyers.

"If someone is out looking, this is the time to buy," says James P. O'Conor, chairman of the board of O'Conor, Piper & Flynn Realtors.

"There is an abundance of inventory on the market today -- a wide variety of homes in all price ranges. Plus, the financing terms are very attractive. The combination of the two results in a buyer's market. For the foreseeable future it will remain that way," he declared.

Lisa Caldo, spokeswoman for The Ryland Group, says conditions favor homebuyers more now than they have in years.

"Interest rates are so low, hovering below 10 percent," Ms. Caldo says. Rates have dropped to single digits and are lower than they have been in a decade. Ms. Caldo says rates were ranging from 12 to 16 percent in 1988, and were as high as 17.5 percent in 1981.

Volatile world events could very quickly drive interest rates back up. But, she says, low interest rates are not the only reason to buy now.

"Affordability is a big factor," she says. "Prices are lower so more people are qualifying for loans."

In addition, some builders are offering incentives. "Buyers might get additional options with the base cost, or have the closing paid or points paid by the builder," Ms. Caldo says.

"Say a fireplace doesn't typically come with a particular home in good market conditions. But a builder might throw it in now."

She says incentives could easily amount to "a couple thousand dollars" off the base price of a home.

Properties moving most often now are likely to be starter homes and condominiums.

"We're seeing a trend toward the first-time buyer," Ms. Caldo says. "These are people who have been renting. The American Dream of having a home is still very strong."

For existing homeowners who want to trade up, "getting their home sold is the big question," Ms. Caldo says. "That's what is keeping a lot of second- or third-time buyers from the market.

"But if you're looking at buying a house as an emotional and long-term proposition, the buyer is still at a definite advantage.

"One thing homeowners should consider is that a home has been a consistent performer if you view it as a long-term investment," she says. "From 1970 to 1989 the Consumer Price Index rose at a compound annual rate of 6.3 percent. But the median average price of an existing single family home rose at 7.6 percent, outpacing the CPI."

The real estate industry is cyclical, and the current buyer's market is not likely to last.

"Right now the supply-demand equation favors the buyer," Ms. Caldo says.

"But because permits and starts are down, inventories are shrinking. The supply-demand curve will start to favor the seller once inventory is down."

Mr. O'Conor says news of the falling value of real estate has kept many buyers from making a move.

"We've all been reading about how much of a downturn there has been in the housing market," he says. "But the Baltimore area has not been as severely hit as some other areas of the country."

"The average sale price in the Baltimore area actually went up a little bit last year," he says. "The price of a property when it sells has not decreased, it's just the number of properties that have decreased, and that's what we see."

Fear of the Persian Gulf war has also added to potential buyers' concerns.

"A great deal of buyer hesitancy has been generated by the Mideast situation in the last five to six months," Mr. O'Conor says.

"That's a big element. No one knows how long the Iraqi war will last, nor do we know what effect it will have. I don't think it will

change from a buyer's to a seller's market."

Adriane Miller is an area free-lance writer.

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