by Melanie Grimes

Created on: February 07, 2008   Last Updated: July 21, 2009

THE REAL ESTATE MARKET IS GOING TO TURN AROUND.

Getting a bank loan is more difficult than it has been in recent years, but many new incentives offer help, especially to new home buyers. Morgage rates are at all time lows, and the government tax credit is luring buyers back to the marketplace. Recent price drops make home buying bargain shopping, but many still fear prices will go lower, and this is slowing the market recover. With many of the foreclosed homes sold, the market is starting to turn around. Commercial developers are buying up distressed property, showing they are willing to take more risk. Some analysts feel this shows the market is at its bottom in the summer of 2009, and will not go lower.

One the biggest factors delaying the turnaround is fear. But the main reason the market is slow is this:

CONSUMER CONFIDENCE.

There are many foreclosures in some markets, but nationally, real estate is a good investment.
Here's why.

WE CANNOT MAKE MORE LAND.

With increases of population growth, it is inevitable that land will become a more and more valuable commodity. Many markets are still having annual growth and appreciation of real estate prices.
However, investors are afraid there will be a more serious downturn and they will be left losing 10-20% in the coming year. This is NOT likely.

Here are a few reasons.

1. Interest Rates at an all time low today.

2. Jobs: The unemployment rate is low.

3. Federal incentives.

The drop in interest rates will help fuel the economy. The expected increase in JUMBO LOANS will be great fuel for the market. Houses in the $700,000 price range will be eligible for interest rates around 5%.

How does this help? Let's take a home valued at $700,000 with a 5% mortgage.
That same home with a 9% mortgage will cost an additional 20% over the lifetime of the mortgage. That means that if you buy this home, even if prices decrease by 20%, you are still better off financially to buy this home now. Are interest rates going back to 9%? Historically, this has been the case in economic times such as these.

Real estate investing will remain a buyer's market for the short term, as concerns of mortgage crisis and housing price drops will work to their advantage. Buyers will be able to negotiate better terms for now but as soon as the rest of the buyers overcome their fears, the real estate market will heat up again because of the favorable economic conditions and the ability to negotiate favorable terms with sellers will disappear.

Borrowing hundreds of thousands of dollars at 5% is an offer you don't get every day!

In August, 2008, Kramer of Mad Money blamed Fanny and Freddie Mae and stated that when support of them ceased, the market would turn around. The other thing that would help is buyers buying home, which means, we need confident consumers. In July 2009, commercial builders are stepping up to purchase distressed building projects. This also indicates an increased interest in risk.

We may not be at the bottom of this low yet, but all agree we are close. There are new tax breaks for first-time home buyers in place. With lots of inventory available, so if you are want a good deal in real estate, now is the time to buy.

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