Why Should I Buy Now?

Any investment consideration, whether it be real estate, gold, or fine art, follows a predictable cycle with nine stages (see chart: “The Stages of a Market Cycle”). Let’s start with optimism, the period in which many people are excited about buying a home. When the market is strong, people’s purchases quickly increase in value, which leads to euphoria, which can lead to rash decision making. 

From euphoria starts a downward cycle. As prices start to fall, buyers go into denial, with statements such as “I’ll be in the house a few years, so this won’t be a challenge.” After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one).

The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That’s exactly where we are in many real estate markets today. Clients who are motivated and qualified to buy will be able to look at the market cycle chart and understand why now is the best time to invest in real estate.

Source: Steve Harney

Dow Jones Industrial Average

   THE OLDEST INDEX – The Dow Jones Industrial Average will turn 113-years old next month.  Only 12 stocks were used in the index’s original calculation in May 1896 and only 1 stock in that group remains in the index today.  The index was expanded to 30 stocks in October 1928, just 1-year before the 1929 stock market crash.  The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy (source: Dow Jones).

JUST A REMINDER!

Under the economic stimulus plan opportunities are particularly advantageous now for first-time home buyers or buyers who have had no ownership interest in a home for the last three years. Not only are interest rates extremely low but an $8,000 “tax credit” is available to those who qualify.

The $8,000 credit that just went into effect is a much better deal than the one aimed at enticing home buyers last year. In 2008, first-time home buyers could receive a $7,500 tax incentive, but the home buyer has to repay the sum to the government over 15 years.

In contrast, home buyers this year can receive $8,000 without any obligation to repay the money, provided they live in the home for three years.

As a credit, you receive money the way you would a tax refund. The good part is this is a refundable credit, which means that even if you do not owe much in taxes, the government will give you the money. That makes it better than a normal credit or a deduction.

Under the rules for the new $8,000 tax credit, you have to buy your first home between January 1, 2009 and November 30, 2009.

If you, or anyone you know, would like further information on the $8,000 tax credit or would like to purchase a home utilizing this incentive it would be my pleasure to assist in this endeavor. Please contact me by email krayremax@aol.com