In the Feb 25 issue of Time Magazine on page 54 is an article “Right On Your Money” by Dan Kadlec. The article is titled “Ignore the Headlines“, something I’ve been mentioning here in previous posts. It is a must-read for home buyers who have been reluctant to buy now because they’ve been listening to the mass media negativism.A couple of Kadlec’s notable comments are:
But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious – before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree.
When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run.
Kadlec includes a chart in his article that shows a comparison of buying a $218,900 home now at 5.5% interest rate vs waiting for that home’s price to drop 10% ($197,010) and paying an interest rate of 6%. The resulting mortgage payment is the same ($993.31) for both scenarios. Kadlec’s conclusion is that waiting a year will save the home buyer nothing, and they would have spent a year living somewhere other than where they would like to live.
His bottom line recommendation is to “get off your thumbs” and buy. I concur with that recommendation. What I see is that sellers have dropped their prices to sometimes below what they paid. Other sellers are realizing that their home can’t be overpriced when they put it on the market and are willing to “price it right” to sell. So those homes represent a great value for the home buyer.
The homes that “may” not be priced right are those where the seller is upside down in their mortgage or mortgage & equity loan. Those sellers owe more than the home is now worth and are not likely to be flexible on reducing their price. Realtors® have access to information that allows us to know which homes might be in this situation so we can advise our buyers that they may not be able to buy a particular home at a lower price. Armed with this information, the buyer can make the best decision for their situation.
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Elaine Reese
614-825-8860Real Living HER379 W Olentangy StPowell Ohio 43065
Assisting home sellers and buyers throughout Central Ohio in achieving their dreams.
1 response so far ↓
Blue Ridge Georgia Cabin Rentals // 03/03/2008 at 2:54 pm |
I think the media has been making to much of the situation also. I think it is a lending crisis and not a real estate crisis and how the lending industry handled themselves was wrong taking stated income and giving loans to people who could have never paid once the ARM adjusted.
Actually I think it is a economic problem also that why is it most americans can’t afford a median income.
These are the stories I like to hear about not how foreclosures are growing like rabbits.