While this is a very good year to buy property—mortgage rates are very low, and real estate prices have essentially bottomed out in many areas—the real estate market has divided into two very different segments. In some areas, the recovery already is well under way, while in others, home prices continue to languish as heavy foreclosure activity continues. Resist the urge to buy in regions where the housing recovery has not yet begun. Homes there might seem like once-in-a-lifetime bargains, but these areas actually are where the risk of continued losses or years of languishing prices are highest. They tend to be places where problems run very deep—perhaps jobs are scarce, and residents are moving away. It is better to buy where a rebound has already begun, even if that means you don’t get the lowest possible price. Two statistics that suggest a neighborhood falls into this category: A shortage of inventory—ask your real estate agent to check the multiple listing service (MLS) to find out how many months of inventory are on the market in the town or neighborhood (less than four months suggests a strong market)…and price appreciation—confirm that the Case-Shiller Home Price Index is showing appreciation in the area (go to www.StandardAndPoors.com, and search for “Case-Shiller”).

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