Miami real estate news and information

BusinessWeek Reports “If You Don’t Buy a House Now, You’re Stupid or Broke”

 

BusinessWeek bellows:  “If you don’t buy a house now, you’re stupid or broke”.    Okay, Marc Roth softens the blow somewhat as his article continues … but the basic gist of the message is simple and straightforward.  Here’s what matters…  Want to know why? orange_flower 

We are seeing, right now, the lowest mortgage rates we’ve seen  in the past 40 years. (As of my writing, today, interest rates are hovering around 5.25%… A few months back they were at about 5%) … Interest rates are inching upward, over the past four months.  Quick bit of history:  If you look back to 1970, interest rates were at 5%.  By 1980 they’d risen to over 18% (going as high as 20%).   As of around 1988 they started downward again…   to 10%  in the 1990′s,  and into the single digits in the year  2000.

Historically,  interest rates go up a lot faster than they go down.  If you are “one of those buyers”…  sitting on the fence  and hoping  for the housing market to drop another 10%…  at the very least  you’ll lose  an opportunity to buy while there’s a somewhat decent selection of inventory available, and lose some absolutely phenomenal opportunities to buy ‘well’.  The stock market rallied.  The housing market is about to do the sameAs property values rally, interest rates will go up, and go up fast.  The government has been keeping interest rates low for the past year and a half now …  something that’s not likely to continue.  

As our economy strengthens,  interest rates will go up.  An increase of just 1% is equivalent to the housing market dropping by 10% …  That 1%  interest rate increase makes your monthly mortgage payment virtually identical to what it would have been, if you’d bought the same  house when it was priced at 10%  higher.  Prime example:  A  $300,000  home at a 5% interest rate is about $1,630.  The same house, purchased for a  10% lower sales price  ($270,000 ) at an interest rate of just 1%  more… means that your  6% interest rate on that $270,000  house would run approximately $1610/ month.  Those two mortgage payments are virtually identical.  Worth holding out for?  I’d say no.  Call me when you’re ready to buy … and in the meantime, I invite you to read more  articles on MiamiRealEstateCafe.com.  We’ll keep you  updated on the  local real estate market.

To receive my blog posts directly to your inbox, click here to subscribe.