Is this the right market to buy a home? Not for the faint-of-heart!

by: Alex Maleki

With home prices down as much as 50% over the last few years, many are beginning to believe now is the perfect time to wade back into a depressed home market. President Obama's administration is offering first-time home buyers an $8,000 tax credit, and mortgage rates are still near historic lows.

But not everyone agrees that it's safe to jump back into the home market. Despite a recent increase in home sales in California, 60% of January sales in the state were homes that had recently been in foreclosure. Many banks and lenders have voluntarily suspended foreclosures in recent months, leading several housing economists to believe that another wave of foreclosures is near.

And, the bad news is not over yet. Reports from early March indicate that as many as one in nine mortgages were delinquent, causing further strain on an already depressed home market. With unemployment rates above 8%, topping 10% in four states, it's not unreasonable to think that the home market will get worse before it gets better.

Not everyone, however, is avoiding the current home market. Some buyers, perhaps remembering the sideline views of the last housing boom, are feeling confident that the current home market presents an attractive long term scenario. Homes that were impossible to fathom for most prospective buyers are now within reach. And, many people are afraid if they wait any longer to purchase a home, the window of opportunity may pass them by again.

So, while it's not quite clear if today's home market is the right time for you to invest, you can certainly steer clear of many mistakes made earlier this decade: unproven income, Adjustable Rate Mortgages, and living beyond your means. Banks and Lenders have severely tightened their lending standards, so if you can't document your income, or have a FICO score below 680, you're not quite ready for this home market either.

In the end, common sense and bit of discipline will serve you best. Mike J. Belsky, of Sacramento, recently purchased a 2 bedroom home in foreclosure for $194,000.00. Three years ago, the same home was listed for $339,000.00. So why did Mike think now was a good time to get into the home market? "The home I purchased is a great value in a nice neighborhood. But, what really counts is I can easily afford the payments, and I plan to stay here for a long, long time." Follow Mike's lead, and the home market just might recover.