Low Home Prices and Mortgage Rates Make Spring Good for Buyers

By Kyle Chezum Updated on 4/22/2011

Two coinciding financial trends are combining to make this spring a unique time of opportunity for home buyers and, especially, qualified first time home buyers, if they can come up with the down payment money.  The two trends are home prices and mortgage rates.  Both are decreasing at present, though mortgage rates have gone up and down since the start of the year.

Home prices, though, have not been so volatile.  Instead, they've trended in exactly one direction.  Downward.  Real estate data firm RadarLogic released a report this week that examines the current state of the housing sector.  The report showed that home prices across the nation are collectively the lowest they've been since 2003, long before the financial crisis got started.

Home prices in the 25 top metropolitan areas have decreased 36% from peak highs in 2007.  THat's a staggering drop for just a few years, and it's a dip that has made many consumers question the value of investing in real estate.  RadarLogic placed much of the blame on simple supply and demand.

The report said, "The foreclosure process remains bogged down after investigations launched late last year prompted temporary halts by some mortgage servicers and created a bottleneck as paperwork was re-filed.  Housing demand is also constrained."

If interest rates continue to decrease, though, as they have been over the past few weeks, more homebuyers may find it financially advantageous to enter the game.  At present, 30 year fixed rate mortgages are at 4.8% across the board, a number far lower than was common during the height of the bubble.