Should I Buy a Home in Today’s Market
Everywhere I turn, the outlook looks bleak for the current real
estate market. Mortgage companies are filing for bankruptcy protection left and right.
Lenders are abruptly tightening their loan requirements; making it much harder for borrowers to get funded.
Pessimistic economists are not making things any better as they declare how this meltdown could last well into the
later part of 2012.
I have three questions, "Are the economists just being gloom merchants? Should I buy a home in today’s market? Or,
should I wait a year or two for the market to correct itself?
My answers to your questions are as follows; YES! YES and NO!
Don’t listen to the economic pessimists. They get paid to sell information, attract advertisers and in some cases
even manipulate the market. Any info they dispense, good or bad, should be taken with careful research of the facts
and possibly a grain of salt. In this case, heeding their advice could be costly. Having said that, here are my
five critical reasons to purchase a home now.
#1 It’s Buyer’s Market
With the abundance of properties available, it is clearly a buyer’s market. And in a sizzling
hot buyer’s market, owners know their properties could potentially stay listed much longer than they would like.
Consequently, not only do the prices drop drastically; many owners are willing to accommodate buyers to seal the
One Cobb County, Georgia couple not only lowered their asking price to sell their home; they
threw in a brand-new automobile. Needless to say, the buyers were ecstatic. Says Barry Miller, a buyer's agent
based in Denver, “A buyer's market gives you leverage to get the most concessions you can from the seller.” This
is a buyer’s market, take advantage of it while you can!
#2 Housing Prices Will Rise Again
Our economy goes in a cycles. To keep things simple, the market is goes up; then market goes
down. We go from a seller’s market to a buyer’s market. Currently as you know, we are in a buyer’s market.
Meaning that prices are dropping and sellers don’t have much leverage if any at all. But this current market
And when it does, you can best believe that sellers are going to take advantage of the
seller’s market. With an over abundance of zealous buyers, sellers won’t be making any concessions and buyers
will find themselves trapped in fiercely competitive bidding wars. Waiting for the market to correct itself to a
seller’s market will cost you dearly.
#3 You Are Flushing Your Down Payment Down The Drain
If you wait to buy and your primary option is paying rent in the meantime, you might as well
flush your money down the drain. One couple signed a two-year rental lease at $1800 p/m in an exclusive
condominium community in Smyrna, Georgia.
They opted to rent instead of purchasing a home because they were waiting for the market
to get better. Which means that at $1800 p/m, they will flush approximately $43,200.00 down the toilet. That
amounts to a 20% down payment on a $200,000.00 home. It’s a simple question to answer, “Why rent when you can
#4 Inflation Will Take a Chunk Out of You Pocket
While you wait for the market to correct itself to a sellers market, inflation is increasing
the price of literally everything. Food, gas, milk, bread, cable, water, wood, drywall, windows, paint, nails,
doors, bathtubs, carpet, copper, roofing material, lights, cement, permits and even the cost of moving. These
increased costs are passed on to… you guessed it, the buyer. Hence, the longer you wait, the more you pay.
#5 Interest Rates Will Eventually Go Up
As you know our economy goes in cycles. Another one of those cycles is the interest rates.
Right now they are still low. However, we are entering into an election year, which could bring about numerous
uncertainties both statewide and abroad.
Historically, these uncertainties always impact our economy. If they cause the interest rates to go up, this upward
swing could be the deal breaker for many potential homebuyers. Let’s say, God forbid that the rate jumps two
percentage points by the end of the 2nd quarter of 2008; Now perform a side-by-side comparative analysis
of the monthly mortgage payment on a 30-year fixed loan at an interest rate of 6.1% versus 8.1%.
Term of Loan
30 years fixed
Term of Loan
30 years fixed
Waiting till the market corrects itself means you will pay an extra $269.51 per month, which
comes to $3234.12 annually. I have to ask, “What could you do with that type of money?” Make some investments?
Purchase a boat? Pay off student loans? What about reduce credit card debt? Interest rates are eventually going
to go up, don't wait and get caught in the upward swing, the time to buy is now.
Harold Becker is a private real estate investor who has been successfully investing in real estate for
twenty-five years. He has helped countless homeowners achieve their dream of home ownership whether their credit
was bad or the market was up or down. His information is always insightful and inspiring.