As a Realtor, I help people invest a lot of money. It’s a job I take very seriously and as we’ve seen over the past couple of years, bad advice can lead to bad circumstances. That’s why when I tell my clients something, I want to make sure that I believe it 100%. I don’t like creating a sense of false urgency.

Affordability - Three years ago when the prices were going through the roof I had more people say to me “I remember when property sold for a lot less in 2000, I should have bought then”. If I had a dollar for every time someone said that to me I’d be spending the winter in Colorado skiing.

Every month the National Association of Realtors releases the Housing Affordability Index. The Housing Affordability Index is a broad indicator of affordability using consistent values and assumptions over time and shows the relationship between home prices, mortgage interest rates and family income. In January the index rose 13.6 percentage points to 166.8, a new record high favorable number since tracking began in 1970.

According to NAR, a median-income family earning $59,800 could afford a home costing $283,400 in January 2009, assuming a 20 percent down payment and an expense equal to 25 percent of gross income for mortgage principal and interest. A year ago, the typical family could afford a home costing only $263,300.

Low Interest Rates - Interest rates have been bouncing between 4.5% and 5%. Just a few years ago, the rates were at 6% and we thought that was a great rate. For a $200,000 loan the difference between 6% and 5% is $125 a month or $1,500 a year. It’s always difficult to gauge when rate will go up or down, but all indicators are that rates will stay this low for a while. The problem is we can’t predict when rates will change.

Financial Benefits - In addition to the current benefits of buying a home this year, there are also the traditional benefits of home ownership. First, instead of putting money into your landlord’s pocket, you’ll be building equity in your own real estate. After a couple of years, your mortgage payment will be the same or lower then the rent for a comparable space. Second, you get additional tax write offs. Your mortgage interest is tax deductible and in the early years of your loan most of your payment goes towards your interest rate. Even in the tenth year of your mortgage, your payment can still be 75% interest. Your property taxes are also deductible. When you combine the two, it usually blows the standard deduction out of the water.

If you’re a first time homebuyer, this is the year to buy. Take advantage of the prices, interest rates, tax credits and start enjoying the growth of equity that we will be experiencing in the near future. By the way, if you come to me in two or three years and tell me that you should have bought in 2009, I’m collecting a dollar – I missed my ski trip this year!