Home prices are stabilizing!!! Really???

Integrated Asset Services, an REO Asset Management Firm out of Colorado, just stated that they are seeing home prices stabilize in some markets. Based on what has been happening in the Elk Grove and greater Sacramento areas, this sounds correct. The real question here is: Is this a temporary event or a long term event? My opinion is that it's short term for a few reasons. As we know, prices are determined by supply and demand. Right now, demand is very high and there is not enough supply, so it appears that home prices will stabilize, if not, go up. So let's get to supply. It's true that supply is low right now, but it is anticipated to go up some time in the future. Due to the moratorium that Freddie Mac, Fannie Mae, and other banks observed, many foreclosures were put on hold, which will be coming soon. It is estimated that between Freddie Mac, Fannie Mae, FDIC, and other banks, there are hundreds of thousands of REO's coming to market in the future. They simply don't want to flood the market and drive down the prices any further. They are trying to figure out strategies to bring these REO's to the market with minimal future decline in home values.

In the end, the stabilization of home prices may be just a temporary event, a spike if you would. Of course I don't have a crystal ball to see what's going to happen in the future, but there is a good chance the market will see further declines due to the information you have read. Regardless, it may make sense for most first time buyers to purchase a home due to the low interest rates, $8,000 first time home buyer credit, and the $10,000 State of California credit to anyone who buys a never lived in home. So when people ask me if it's a good time to buy, I tell them it all depends on YOUR situation because it may make sense for one person, but may not make sense for another. We all have different factors, tax implications, benefits that we receive when we buy a property. Talk to your CPA to see if it would be better to buy versus rent, since renting right now is about as much as a mortgage payment. More importantly, make sure you feel secure with your job before you buy. The last thing you want is to be out of work right after you purchase a home.