Due to historically low interest rates and lower home values, monthly payments have dropped to the lowest levels in more than a decade. However, inventory is down as well.
Steven Thomas, an expert in housing trends and an quantitative economics major, explains that "interest rates below 4 percent are not only unheard-of, but absurd. No matter how long the Fed is poised to keep the 'discount rate' at rock-bottom levels, it will eventually have to increase that rate. An increase is inevitable and only a matter of time. So now is a great time to be a buyer."
So the reason for multiple offers on for-sale homes? Payments have not been this low since 1999!
According to Thomas, "the median sales price for a single-family detached home in January 2012 was $449,000. Based on the average interest rate for that month of 3.9 percent, the monthly payment was $2,118. In 2006, the median sales price was $713,160, and the interest rate was at 6.4 percent, which resulted in a payment of $4,461, more than twice the January 2012 figure."
The 2012 UCLA Anderson Forecast says that mortgage interest rates will rise to an average of 7.3 percent within a couple years.
At the current median sales price, that means the mortgage payment would increase by nearly $1,000 per month, from $2,118 to $3,078.
Staying in a home purchased at the lower interest rate for 30 years equates to a savings of more than $345,000 over the life of the loan.
So if you have been waiting for the right time to buy, now is the time.
With that said, to improve your chances be ready to put a loan pre-approval letter in your Realtor's hands and write your offer the day you find the right property; sometimes, even that will be too late.