Answers (9)
- Frank Shaw, "Under640FicoScoreLns"
- Contributions:79
- Austin Logan, "AustinLoganC21"
- Contributions:203
- sunnyview
- Contributions:26838
- Dan, "the_country_hick"
- Contributions:4827
How do low interest rates make a better buy when higher interest costs will deflate values?
- Shevy Akason, "Shevy"
- Contributions:144
- HomeSand.net, "White Picture"
- Contributions:4720
- Shevy Akason, "Shevy"
- Contributions:144
I am based in Orange County and I argue that it's not the ideal time to buy in market market from a pure investment standpoint, however, people's life situations and markets vary. While many agents' argue that it's a great time to buy simply because rates are low and prices are low compared to the bubble prices makes a convenient argument for their personal income, it's wrong. However, saying blanketly that it's a bad time to buy is also not completely correct.
First, regarding the rate argument, historically people are better off buying when rates are high because prices are lower during those periods and when rates drop they can refinance, while if you buy when rates are low, prices will be relatively high and one cannot change their principle owed with anything but cash. In addition, just because prices are lower than they were at the peak does not necessarily mean they are historically low.
However, contrary to the flip argument that it's a horrable time to buy period, if one can purchase a home with good financing at or below rental parity and ideally plan to hold the property for 15+ years, it could be a good purchase for their situation if they have other personal satisfaction and value they derive from the property. In addition, there are many markets that have properties at or below replacement cost that with the right financing could be great purchases (not Yorba Linda from what I've seen), especially if the government is successful at getting us out of the recession and creating inflation.
While every market is different, in my opinion, no one should be buying now that does not plan to hold the property for at least 7+ years with 15 or 30 year fixed financing. Moreover, people should run from agents that simply say it's a great time to buy because "rates are low and prices are low."
- Shevy Akason, "Shevy"
- Contributions:144
Just because prices are low compared to the crazy bubble we had and rates are low does not necessarily mean it's a great time today. These kind of statements understandably fuel anti-agent feelings that are growing and give the industry and agents a bad reputation. Agents that use this blanket argument are doing their clients and the industry a disservice. Unfortunately, NAR, the leading industry organization participates in this type of nonsense.
I am based in Orange County and I argue that it's not the ideal time to buy in my market from a pure investment standpoint, however, people's life situations and markets vary. While many agents' argue that it's a great time to buy simply because rates are low and prices are low compared to the bubble prices makes a convenient argument for their personal income, it's wrong and does not provide a proper analysis of what's best for their client. However, saying blanketly that it's a bad time to buy is also not completely correct.
First, regarding the rate argument, historically people are better off buying when rates are high because prices are lower during those periods and when rates drop they can refinance, while if you buy when rates are low, prices will be relatively high and one cannot change their principle owed with anything but cash. In addition, just because prices are lower than they were at the peak does not necessarily mean they are historically low. As agents, I encourage you to stop this "buy now or be priced out when rates go up nonsense." When rates go up, it's likely that price will be forced down.
However, contrary to the flip argument that it's a horrible time to buy, if one can purchase a home with good financing at or below rental parity and ideally plan to hold the property for 15+ years, it could be a good purchase for their situation especially if they have other personal satisfaction and value they derive from the property and the government continues to favor home owners versus renters with legislation. In addition, there are many markets that have properties at or below replacement cost that with the right financing could be great purchases, especially if the government is successful at getting us out of the recession and creating inflation. However, most areas of Orange County including Yorba Linda, are not below rental parity and are not priced below replacement cost. They may never be below replacement cost, however rental parity is extremely important to consider.
While every market is different, in my opinion, no one should be buying now that does not plan to hold the property for at least 7+ years with 15 or 30 year fixed financing. Moreover, people should run from agents that simply say it's a great time to buy because "rates are low and prices are low."
- sunnyview
- Contributions:26838
Is NOW a good time to buy in Yorba Linda?
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- 5.0/5.0
- (4 reviews)
Contributions:180#1) I think with the interest rates being at an all time low of 4.25% to 4.5% for 30-year fixed it is a great time to buy. Think about it...even if the market dips a little more with rates rising you are probably better off with the lower rate over 30 years.
#2 Housing is about 1/2 the price of where it was just 3-4 years ago now.
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