Have you seen the new ReMax TV Commercial called Kick? It is hysterical and makes a darn good point: people who want to buy a home and wait are going to be kicking themselves when the real estate market turns.
Two things that when they turn will make buying a home more difficult than it is here in May 2009: mortgage interest rates and home prices. If one or both of these go up in the near future there will be those potential home buyers who have chosen to gamble with the continued home price slide and mortgage interest rate dip that will probably kick themselves for waiting to buy a home.
Will Mortgage Rates Go Down From 5.0%?
The answer to this question is a resounding: “Who Knows!” Some experts say yes, while others say no, but no one really knows for sure. The better question is this: how much lower do they really need to go to make buying a home a really really good deal? Home buying under these current rates is already an historically great deal.
For a $200,000 home at an interest rate of 5.0% for a 30 year fixed interest rate mortgage the monthly payment is $1,073. If interest rates go down to 4.75% with all else equal the monthly payment goes down $30 to $1,043 per month. If this amount of monthly payment is a deal breaker then you may be looking to purchase too much of a house. You may also consider getting another job where you can afford a little more. The risk is waiting and all of a sudden rates go up and do not come back down any time soon.
Will Home Prices Go Down Anymore?
Again, this is a crap shoot, however, a good indicator of what is about to happen in the housing market has been recently seen in the news. There have a lot of news reports that the number of REO properties in many locations are decreasing which means there are less homes on the market for sale. Also significant about REO homes is that they are most of the time the cheapest on the market. With less of the cheapest homes on the market this means that more expensive homes are being sold which will start to influence market prices and demand. With both of these factors going home prices are likely to settle out and eventually turn up.
With less and less cheap home deals on the market competition for homes will go up. You may find yourself in a bidding war in the near future if you continue to push the fate of the housing market. Right now, the competition is not too bad, but it will pick up as time moves along.
Bottom line is: Get off the fence and get into the game – the home buying game.