Having a few friends who are Real Estate agents, you often hear that now is the best time to buy... The truth generally is there are better times to buy, and worse times to buy. Generally. Then, very rarely, everything falls into place that if you can afford it, you will NEVER do better than now. From what we've seen in the Real Estate market, this may quite possibly be the best opportunity to buy a home in our lifetime. In short, if you've been on the fence, get off it..
Yes, not only are we telling you to do something if needed, just like a Stock Analyst who tells you he personally owns, we are taking our own advice. After finally selling our home here in Florence, we just bought a home in Laurinburg, North Carolina. Cheap - and at a rate that would make you puke a few years ago. But why now? Easy.. The fear is always that people buy a house at a price before they've hit rock bottom, and at a higher interest rate. The housing numbers released in the past few weeks tell us that the housing bubble burst has ended for the most part. Here are a few factors that gave us the green light...
1. Interest Rates at an All-Time Low.
This is the obvious one.. Back in the 80's I couldn't believe my Dad got a 4% VA loan when he bought his house in the 1950's. His mortgage back then? About $20 per month.... Well, rates have gone even lower than that now - but they're pretty much done. I started at 3.75% rate, but during the process, it actually dropped another 1/8 point to 3.625%, or 2.75 full points less than my last mortgage in 2007, when prices and rates peaked. The difference between the two in interest? About $300 per month! A key to fixing the housing crisis is right there - refinancing. But, credit is very tight, so who knows?
2. The Price Freefall is Over
Yes, it always depends on what market you live in, but nationally, prices are beginning to recover slowly. In major cities all across the US, selling prices have risen, in part due to the lower interest rates (lower interest rate = lower payments = more house for your money). If you're waiting it out to wait til home prices hit absolute rock bottom, we have advice for you - it's there, and may actually have passed. Jump on that house now, or live in regret.
3. New Permits Are Up.
It's been a buyer's market for years. My agent told me that a recent seller she had ended up bringing $14,000 in cash to the table to sell their house. To us, that' batshit crazy, but some do what they have to do.. There was a glut of available homes, but that is evening out at long last. That has given the sign to home builders that it's finally time to dust off the sawsall, and start making homes again. While it could cause a glut of available houses again, new homes and preowned homes don't always directly compete against each other. Time will tell, but it's a real good sign.
4. Renting is a Crappy Deal
Again, it depends on where you live. If you live in Manhattan, and can't afford $600,000 for a 700 square foot condo, you may want to rent. In most other locations, renting is no longer a deal. My house for example has a mortgage cost of $450 per month. This is for a 4BR/2BA, 2259 sq ft home that needs NO updating or repairs, unless I want to. To rent a home in the same area would be in the $750-800 a month range (and that's conservative). Most rentals in Laurinburg are pretty bad, so it's a no-brainer. Basing the $350 per month savings with the $3500 down payment on it, and my house will break even in a mere TEN MONTHS. After that, it's all gravy... The tight credit market caused many to be forced into the rental market, resulting in skyrocketing rental rates. Buying is way smarter than renting right now...
I'm sure there are other factors that play into all of this as well - and my Realtor buddies will be glad to 'list' them. Sorry, just a little Real Estate humor. We don't overblow things when it comes to buying or selling stuff, unlike the guys on TV, pushing Gold every five minutes... We're conservative fiscally, so when we say it's the Best Time Ever - much less a good time to buy - that's ringing the dinner bell.... Getting financing isn't the easiest thing right now. But if you can qualify, and have been thinking about buying a home, stop thinking and act..
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1 comment:
Mike--not disputing your thoughts but just to add: 1)Bankrate prdicts that interest rates for the most part will stay below 4% thru at least 2013;2)the price free fall also depends on where your property is. Here in Florence unless your close to a foreclosed home your observation is true, but in places like Atlanta/Phoenix/Vegas/South Florida prices are still dropping; 3)Some markets are recovering MB is seeing the glut of condos/houses reduced quickly compared to recent months/years but still no comparison to the boom years; 4)banks are lending but your credit needs to be stellar (think at or near 700) just to get them to talk to you and 5)the estimated house payment needs to be less than 28% of your net income vs previous years when it was gross income.
Congrats on the new place...so when is the first keg party??...teg
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