Why Buying a Home in the Next Three Weeks May Prove to be an Extremely Smart Decision

This is the real reason I wanted to email all of you.  In my opinion, buying a home between now and January 20^th (Inauguration) will prove to be the best time to buy a home in our lifetime.  Here’s why:

So, there’s no doubt that there is pent-up demand out there and that many people have been patiently “waiting for the bottom” for a couple years now.  The media reacts to reported housing numbers (sales & price).  Sales always pickup before price and in most prior downturns, sales picks up very quickly.  And, one month’s sales are reported about 3 ½ weeks after the end of the month so there is a delay between the actual activity and when the data for that activity is reported.  Only when the numbers are published will the media report this data and make predictions based upon it.  The point is, if you wait for the media to start reporting about a bottom in home sales, you will already be two or three months late and will miss the bottom.  However, even more important, if the sales pace returns with a vengeance like it has in most of the past downturns, builders and existing home sellers will not be willing to offer the great discounts and deals they are now.  Once it is common knowledge that the market has bottomed, home sellers will feel as if the pressure is off and will be less desperate and thus less willing to agree to huge discounts or incentives .  In other words, the best deals are going to be given to the customers that buy prior to the bottom when sales are very slow because once we have the bottom, sales will pickup and sellers will significantly reduce their willingness to offer incredible deals.  Also, sales are always slower during the winter so sellers are even more incentivized right now to offer incredible deals.

Here’s another reason to buy a home very soon.  The window of opportunity right now to get a great deal is really only about 3 weeks long . . . here’s why:  Obama’s inauguration is on January 20^th.  Do you think Obama is going to implement an Economic Stimulus Package very shortly after entering the White House?  His economic team has already spent numerous hours working on this package so that it is ready immediately upon his inauguration.  This is no secret . . . Obama has been very vocal about this.  Do you think Obama’s Stimulus Package is going to have a strong Housing Stimulus component to it?  You bet . . . it is becoming more and more accepted by economists that to fix the economy, you have to fix housing.  So, in other words, on or shortly after January 20^th, we will have a package in place to seriously kick start housing.  Now, ask yourself this . . . once the package is announced and home sellers (Builders & Existing Home Sellers) know that Obama has taken steps to significantly increase demand in housing, what do you think will happen to their willingness to offer incredible deals?  I can tell you . . . it will significantly decline.  Why would they offer a great deal when they know that they no longer need to since the housing stimulus is going to be all the incentive buyers need?  The basic point is this . . . the window of opportunity for would-be home buyers to be offered a special extra incentive or significant discount is only open for 3 more weeks.  When Obama takes office, he is going to move quickly and aggressively to fix housing.  Once he does this . . . even before we see the results, just knowing what he is going to do will take the pressure off housing and make the market a little less favorable to buyers.  Here’s the other good news . . . for buyers who contract before January 20^th but settle after January 20^th, they will very likely be able to benefit from whatever stimulus Obama implements (low rates, tax rebates, etc).  So, buying over the next three weeks is a “Two-fer” . . . you get the great discounts associated with the challenging housing market and you’ll most likely also be able to capitalize on whatever incentives are included in Obama’s package.

In fact, you can take this argument even further for new home buyers . . . Obama’s stimulus package is likely to be temporary because only a temporary housing stimulus will create the desired urgency and housing demand.  So, Obama may do something like lowering conforming interest rates to 4.5% for 6 months only.  If he does this, any new Home Buyer who waits until the package is announced may not benefit from this if their house cannot be built fast enough to settle within 6 months.  New Home Buyers who buy now increase their chances of capitalizing on any temporary housing incentives in Obama’s stimulus package.

Anyway, hopefully this all makes sense.  I really believe that the peak of home sellers willingness to offer huge discounts or incentives is right now.  Waiting until Obama’s Inauguration to see what he’s going to do seems like a logical approach for would-be home buyers but I think it will prove to be a mistake since the certainty of knowing the specifics of his housing stimulus will make home sellers feel more secure and less willing to offer great deals.