Why You'll Get Your Money's Worth

Do not let the national news about housing scare you, because it could cost you the opportunity to secure the home of your dreams at a reasonable price and interest rate. For the potential buyer of a new or existing home in this area, there are many good reasons to buy now. The time is right.
The housing market in western Pennsylvania never became over-inflated. Costs here have remained stable, unlike what happened in many formerly "hot" housing markets. As a result, local housing values aren't going through steep freefalls as they are in so many other parts of the country. So when you buy a home in Metropolitan Pittsburgh today, you know you are going to get your money's worth.
Locally, new home sales ran up an impressive record in 2007, a time when some would have had us believing the sky was falling. It wasn't, at least not here in Pittsburgh. While the U.S. Commerce Department reported that sales of new homes nationally plunged by more than 26 percent in 2007, new construction home sales in Allegheny County, according to RealSTATs, a real estate information service, were up an estimated 8.1 percent for the year.
This kind of good news, though, is often overlooked. Bad news buries it. That's a shame, because unfounded fears can unsettle buyers and sellers who should be taking advantage of outstanding opportunities in Metropolitan Pittsburgh's housing market.
It is true that the building industry is cyclical, and the Metropolitan Pittsburgh housing market has experienced a bit of a cooling-down period of late. In reaction, home prices have held at very reasonable levels, as have interest rates. Those two factors alone have contributed to what is an excellent environment for purchasing a home. From the point of view of the potential homebuyer, this combination of events helped set the stage for a buying opportunity. Why not take advantage of it?
With prices and interest rates holding steady, investing in a new home makes greater sense than ever. Homes aren't bought today in order to be sold tomorrow; they are long-term investments. Over time, whatever the vacillations, their value will move upward. The NAHB calculates that home values increase at the rate of 5 to 6 percent annually. Those who make the decision to buy today, when prices in our market are more than reasonable, can expect to see the value of their homes appreciate long term.
There is plenty of praise to go around to account for the ability of Metropolitan Pittsburgh's housing market to offer great buying opportunities when markets elsewhere have tumbled. As someone who began his career in the lending end of Pittsburgh's housing market, I applaud this region's lending institutions for the sensible way they do business. Not only do they understand our area, they also are prudent in their lending practices, refraining from lending too much money, at too great an interest rate. According to a report by the National Association of Realtors, mortgage servicing costs here have trended below the historical average, which indicates manageable financial mortgage debt loads for homeowners.
I also credit Metropolitan Pittsburgh's residential construction industry—builders and developers—for a common-sense approach to the housing industry. Some are among the largest builders in the country, while many others build no more than 10 or 12 homes a year. They offer the entire gamut of housing styles and floor plans, for everyone from the first-time buyer to empty nesters looking to downsize and enjoy maintenance-free living. There is something for everyone. In total, however, Pittsburgh's builders have had the good sense not to overbuild. Instead, they have kept housing inventories at optimum levels, avoiding the glut of homes that has plagued other communities.
Still, builders want to sell product, and there are many attractive incentives being offered right now. Many builders include financing capabilities among their services. Builders here also have retained a personal way of doing business, and homebuyers often find that they are dealing with the owner or principal of the company that built the home they want to buy.
I believe another factor in the stability of our housing market is that people born and raised in Pittsburgh want to stay here. If, like me, you're one of those people, you'll be buying a home and raising your family here. And many of the young people who do leave in pursuit of a career very much want to return. In time, they will, to buy homes and raise their families here. Pittsburgh, after all, is home.
So what should you, the potential homebuyer, do? You can, of course, always decide to play the waiting game. Trouble is, with interest rates low, with housing prices low, and with housing inventories low, that is a very risky game. Trying to time bottoms is something all the best investment experts warn against. When the rebound in housing comes—as it surely will—prices, interest rates and the cost of materials will certainly move higher. The cost of constructing a new home, in fact, normally increases anywhere from 5 to 10 percent a year. My heartfelt advice is that you evaluate your decision to buy based on what you know, not what you hope for.
If you're a first-time buyer, you'll begin to build household wealth. You'll benefit from tax advantages, and you'll begin to build equity.
If you're already a homeowner, remember that it is always best to trade up in a buyer's market. You can sell your home, using the gains from your equity to buy a higher-end home.
When's the right time to buy? The answer is now, if you want to take advantage of current market trends.