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So, the $8,000 first time home buyer tax credit is gone. Now what? You missed the buzzard, and what motivation do you have to run out and buy a property, right?
Well, did you know that in late June interest rates hit the lowest point in HISTORY? For a 30 year fixed rate mortgage, you're looking at mid-4%'s if not lower today! Oh, but we are in the "worst housing market."
Worst housing market = Best time to get the best deals
Lowest interest rates in history = Your chance to save hundreds of dollars on your monthly mortgage
Let me ask you, does the low interest rates and low housing cost give you enough motivation to get out and purchase a property? If not, what else do you need to make it happen? Higher interest rates, higher housing costs?
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Mortgage rates are at record lows, making this a terrible time to buy a house, but realtors count on the fact that most people don't understand the relation between interest rates and asset values.
Short answer: when money is cheap, assets are overpriced.
Courtesy of Patrick.net:Long answer: assets like housing and stock are often purchased with borrowed money. The cheaper the borrowed money (the lower the interest rate) the more people borrow, and the higher they drive the asset prices with this borrowed money. The underlying true asset value is no higher, but because people can borrow more, they pay more. The monthly interest payment is the same, but the total debt is higher because the interest rate is lower. This is not a problem until interest rates rise.
When interest rates rise, people can borrow less, so they can pay less for assets, so prices fall. Those who already borrowed at lower rates lose as their assets fall in price.I will continue to rent and bank the extra savings each month while my owner neighobors cry as their home value continues to fall.......when prices hit the real bottom I will be able to likely pay almost all cash! I am poised to buy, but not at the prices that our gov't keeps helping to prop up.......the US is doing exactly what Japan did....17 years of home price deflation.....
Craig1976 – Thank you for responding. I would love to entertain the person that says "prices are too high". My question to them is well then how much would you like to pay for that? The cost of a home may NEVER be to someone's standards….the price is what a person is willing to pay. Certain neighborhoods in the DC Area have maintained their market values, even in the hardest of times as we go through the "housing crisis." I suppose, it all just depends on where you want to live, and how much YOU want to pay. At the end of the day, the neighborhood or area they are shopping in might not be for them…because the price will never meet their standards.
socal_engr - Information is only valuable to someone who finds value in it. If you are not in the market to buy, and won't be in the market to buy, then why get so upset about it? As you mentioned, not too long ago rates were in the double digits......and they came down quite a bit over the years to be what we call often as "historical lows." The real "overall equation" is sometimes dictated by what the market is doing. Let's look at some facts here...as mentioned in my original post the rates hit the lowest point ever in late June....that is a big plus to buyers. Prices are not at an all-time low, but they are considerably low in comparison to the early 2000's market when prices skyrocketed. As a REALTOR, it is my job to educate the public...who might not realize that they are missing out on a great time to buy. Perhaps, they wanted to wait another year or two....and see value in buying now. The value? Save a lot of money on interest rates and save a lot of money on a lot of house! I cannot disagree with you, if it is not your time to buy...then it isn't. At the end of the day I did my job as a REALTOR to inform you on TODAY'S market.
hpvanc - Thanks for writing your opinion. Have a fantastic day.The Red Squirrel - I hope in time when job security works out for you, that you are able to find the right home for your needs. I'm very sorry to hear about your brother purchasing the property in Florida, and how he is dealing with it now. I have a lot of friends (and some who are REALTORS) who have purchased places down in Florida, and are regretful. The honest truth be told, no one ...not even the best of the best can predict the future. Why didn't NAR educate about the impending collapse? That's the million dollar question, that I can't answer. The fact that the President of the US at the time wouldn't/couldn't tell the public what was going on, how could an association do so? I have to disagree with your last two paragraphs. NAR, real estate companies, and REALTORS have said for a long time "It's a great time to buy".....but it is with cause....and at specific times, reasons are given to WHY it is a great time. My job? It is to educate.....and the roll of a REALTOR is a hub of many tasks to purchasing a home/condo. There are more parts to this career then just finding a match. There are times and have been times when I have told clients plain and simple that they needed to rent for another year or two to put themselves in a better position to buy. In fact, I've even assisted them with putting together a game plan so that they won't fail at their purchase.If you're asking me, personally to admit I am just in it for the "quickest match" and not worried about their interest...I have to say you are 100% incorrect.......actually 2000% incorrect.
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