As John D. Rockefeller famously said, “The way to make money is to buy when blood is running in the streets.”
Whoa! There is a great article in the February 25th, issue of Time Magazine. The article, Ignore the Headlines, is a great article on why timing the bottom of the real estate market is not only tricky, but could negate any potential gains.
For folks in the enviable position of being able to purchase a home without selling a residence, this is a once-in-a-lifetime opportunity for buyers. Housing inventories are high, interest rates are low, you know that mantra by now….
Consider this: the same concerns that will cause the slowing economy to turn around, will also cause the cost of financing to increase. On a macro-scale, not a bad thing, after all, who wouldn’t like to see good news on a national economic scale? However, for those folks considering timing the bottom of the real estate cycle, it could easily mean the negation of all “paper gains” aimed for by timing.
Need hard numbers and a concrete example?
Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.
What a great time to be in the market for a new home, especially in the Ann Arbor area!!
Check out the Team366 Search and Save or give us a call directly at 734.564.7465. For sellers looking for a great marketing plan to expose your home to as many potential buyers as exist in the marketplace, check out our previous post about Internet real estate marketing.