It can be terrifying to watch the business news these days…

• Bear Stearns hedge fund collapses.  
• Countrywide is acquired by Bank of America just prior to collapse.
• The U.S. Treasury takes over Fannie Mae and Freddie Mac.  
• Lehman Brothers, a large U.S. investment bank files for bankruptcy.
• Merrill Lynch is acquired by Bank of America just prior to collapse.
• Washington Mutual bank is on the brink of collapse.  
• The Federal Reserve agrees to an $85 billion bailout of AIG.
• $700 billion mortgage security bailout.
• $250 billion bank bailout.

The unstable economic conditions we continue to hear about on the national level can cause one to question a local real estate purchase.  Here are a few things to keep in mind as you consider a home purchase:

Low interest rates are now lower
In large part because of the government takeover of Fannie Mae and Freddie Mac, mortgage interest rates have dropped considerably.  Recent rates from local lenders are as low as 6.0% for a 30-year fixed rate mortgage, which is a great opportunity for buyers.

Don’t forget the first-time home buyer credit
If you haven’t owned a home in the last three years, you are likely eligible for up to a $7,500 tax credit if you buy a home before July 1, 2009.  This is a great opportunity to get a boost up in the first year of homeownership by helping offset closing costs or moving expenses.

High inventory empowers buyers
As a result of the basic rules of supply and demand, the current elevated levels of inventory (in almost all price ranges) provide buyers with a great opportunity to buy a home at a competitive price.  That isn’t to say that home sellers are universally negotiating large chunks off of their asking prices, but simply that buyers often have the upper hand in negotiations.

A strong and growing local economy
While local economic conditions vary to some degree in different parts of the Shenandoah Valley, the economic climate in Harrisonburg and Rockingham County continues to be very favorable.  Unemployment is still very low, and many companies are expanding or opening their businesses in this market.  

Buy smart
As you consider, with excitement, a home purchase – remember that buying a home should be viewed as a long-term investment.  Run the numbers with your Realtor or lender to understand your financial position 3 years, 5 years and 7 years after purchasing a home.  Have reasonable expectations about how long you will stay in a home, and how that will affect the financial perspective of a home purchase.

Despite the economic storm we are in the midst of nationally, it can still make good sense to buy a home in the Shenandoah Valley.  Get to know your segment of the real estate market so that you are comfortable with the price you are paying, and the value of the home you are purchasing.