A Great Time To Buy A Home?

30-year mortgage rates have dropped back down to their record low mark. There are generous government tax credits in place for virtually all Americans to buy a home. Foreclosures also remain high, meaning that there's significant pressure on prices -- it remains a buyer's market in most areas. Those factors combined sound like a good recipe that should result in a great time to buy a home.

The news about the mortgage rates hit today. Here's a bit of detail via Reuters:

U.S. 30-year mortgage rates dropped in the past week to match a record low set in April, while the 15-year home loan rate fell to a new all-time low, home funding company Freddie Mac (FRE.N) said on Wednesday.

The average 30-year rate dropped 0.05 percentage point to 4.78 percent in the week ended November 25, equaling the lowest rate since Freddie Mac started tracking rates weekly in 1971.

Clearly, this and the other incentives to buy probably aren't too helpful if you're a part of the 10.2% of Americans who are unemployed. But for anyone who feels their job is secure and can afford it, might it be a good time to buy a home or upgrade to a bigger place?

Despite all those good reasons to do so, it depends. I think short-term real estate speculation is probably still ill-advised. Even if home prices have hit the bottom, I don't think they're likely to increase quickly over the next several years. So if you're hoping to get in and get out, you might be in for a rude awakening.

But if you're in the market for a home as a long-term investment, say at least 10-15 years, it's pretty hard to make an argument against buying now. Even if we aren't at the precise bottom, it's hard to believe that home prices could plummet much further in most areas. And even if they did continue to decline a little, the tax credit might make up for most or all of that decline anyway. For anyone who can find an especially good deal on a foreclosure or short-sale property, I find it even more difficult to argue against buying.

I can't imagine that mortgage rates will get a whole lot lower than the 4.75% threshold. That's just extremely low. And I also don't see the government tax credit getting any greater going forward. Even if it is extended again after April, it probably won't increase in size. Sometime next year I think we'll also see foreclosures finally start to decline.

So while it's never possible to say with full confidence that any time is the best time to buy a home, it's hard to see right now as anything other than a pretty good time to buy. It appears to be a buyer's market in every imaginable way.