Ignore the Headlines!
Amy March 1st, 2008
It’s hard to ignore the recent gloomy talk on the national news about the slumping housing market in the formerly hot markets of Florida, Nevada, Arizona and California.
With all of this doom and gloom, the natural instinct is to roll up the driveway, shutter the windows and wait for the financial storm to blow over. But now is not the time to lock yourself in the basement. Here in Cincinnati we have Spring!
As a buyer watching rates and sitting on the fence . . .”would you rather buy a home a day too early, or a day too late?”
It’s time to get serious – before an inevitable rise in interest rates wipe out your advantage. The thing that will make make home prices stop falling is the very same thing that will push mortgage rates higher.
Some members of the financial press are starting to suggest that a bottom is near, and that buyers should get out and start looking for bargains in homes. Time Magazine ran a piece this week titled, “Ignore the Headlines!” by Dan Kadlec, where he notes that Fed rate cuts always “lift the economy eventually.” He also makes the case the buying a home today will beat waiting another year even if home prices drop an additional 10 percent.
To buy a $218,900 home at 5.5 percent is $994.31 a month. To buy next year at $197,010 at 6 percent will cost $994.94. The irony is that in the time Kadlec did his research and when the magazine came out, interest rates were already back over 6 percent, making his example all the more compelling.
You just never know, but you may not save anything to wait when there are great deals to be had today in today’s market.
Today’s Home Price - $218,900
Put 20% down and get a 30-year fixed-rate mortgage
5.5% Current rates after recent declines
Monthly payment $994.94
Cost in 12 months?
If prices drop an additional 10% home price will be $197,010
Recession ends, and the Fed starts to raise rates - Interest rate 6%
Monthly payment $994.94
CONCLUSION: If you waited a year to buy, you would have saved nothing and spent a year living someplace you’d rather not be.
- Buyers , Housing Market , Trends
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