U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities according to a news story released by Rueters.

"American workers are really not gaining ground and they’re so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.

This is exaclty why The Ellis Team recommended mid 2006 that buyers begin thinking of purchasing real estate again in SW Florida.  Even in a declining market, affordability becomes an issue when interest rates are rising.  We pointed out in earlier articles that even if a home eventually dips in price later on and you wait to buy it at the market low, that same home may cost you more becuase the payment will be higher as rates rise.

One thing we know is that prices have come down substantially in the past year.  Nobody knows for sure where the bottom is, but many have argued we’re close.  We do know it’s almost impossible to time the market perfectly.  In fact, we have some analysis that suggests it’s already happened in certain segments, and other data that suggests we have more to go.

Most real estate experts will say because prices have fallen, and because rates are unexpectedly low, now is a good time to buy.  Selection is available, prices are down, and rates are low, a perfect Trifecta.

Real estate is always a good investment.  Not only does it provide shelter, it’s a great way to gain equity over time.  Real estate may be risky for short term investors who wish to gain from a quick flip, it’s always good for long term investors and people who plan to live in the home.  It’s almost impossible to save up enough money each year to keep pace with inflation, so the sooner you buy that first home the quicker you’ll be keeping pace, and it will make it easier to trade-up to that next home instead of constantly trying to save the downpayment for that higher priced home.