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Is it truly a great time to buy?

There's no doubt that sales are being driven by favorable prices. Purchases today indicates that buyers realize that housing remains a relatively rare commodity in Southern California, which is expected to add tens of thousands of new residents over the coming years.The median price of single-family homes sold during September declined 37.1 percent from a year ago to a median of $392,500. It was the first time since 2003 that the median dipped below $400,000.

The real estate market received some welcomed good news yesterday; after U.S. Treasury Secretary Hank Paulson announced that the government would buy $500 billion worth of mortgage securities from Freddie, Fannie, and Ginnie, representing about 10% of all outstanding securities. That news sent interest rates dramatically lower, with many borrowers locking in 5.5% 30 year fixed mortgages yesterday. This action from the government should begin to increase real estate activity as fence sitters starting buying and locking available loans.

It should be noted that Paulson is NOT buying troubled loans; rather he is providing liquidity to a market that has been illiquid. The $500 billion purchase isn't seen as a "bail out" but it is seen as an investment by the Treasury in solid assets that aren't troubled. This is great news for the home buyer, as rates are incredibly low along with home prices. Interest rates today were averaging 5.5% for 30 year fixed rate loans.
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