If You Don't Buy a House Now, You're Stupid or Broke

Have you read this article yet? It was featured in Business Week.  My first thought, wow! what a blunt and harsh statement! But the writer, Mark Roth, uses this headturning title to get your attention to make excellent points for those who are on the fence.  Namely that interest rates are at an all time low, in fact, the lowest in 40 years. He noted that in the late 70s, rates hit a high of 18%! Can you even imagine buying a house at 18%?  I personally can't fathom it as I bought my first house with an FHA loan while I was in college for 7% in 2001.  In the 80s, when rates dropped from 12% to 9%, my parents practically danced their way to the 1^st refinance of their home.  Generation X'ers probably would never dream of purchasing a home above 7% given all we have ever known are super low rates hovering between 5-6%. Mr. Roth points out the history of previous interest rates as well as the impact of rates on one's purchasing power. I happen to agree with his prediction that as the economy becomes more stable, interest rates WILL rise to hedge inflation.  My prediction has been that by this time next year, rates will have risen 1-2% at a minimum.

In Charleston, the average sale is $250,000. Assuming a 5% down payment at 5% interest on a 30 year fixed, your monthly principal and interest payment would be $1275.  If rates rise to 7%, your payment increases to $1580/month.  Some buyers may be on the fence because they fear prices may drop further. Consider this. If there is a 10% decrease in price and the $250,000 falls to $225,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422.  You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.  Real estate appreciation is always a cycle and as the economy stabilizes, values will level out.  Steve Harney is already analyzing data this is happening in many markets and that this will occur by 2014 in many states. Making a home purchase is still a decision that should be weight carefully and is not for everyone.  One important consideration will depend on how long you plan to stay in the home.   

Mark Roth summed up the article, "What I'm trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime."

The Charleston Relocation Experts team specializes in helping families make good decisions.  We do NOT think you are stupid or broke if you don't buy a house right now.  But if you are considering purchasing a home and would like a FREE consultation, we'd love to sit down with you and help you weigh your options and direct you to a qualified, caring mortgage professional that will help you with the numbers. 

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We are approved by Boeing 3^rd party relocation company as Charleston Boeing Relocation Specialists with Carolina One Real Estate in Charleston, SC.  Visit us at www.CharlestonBoeingRealtors.com. Contact Top Real Estate Agents, North Charleston, SC Relocation Experts,  Licensed Realtors® in South Carolina at 843-849-5217 or info@CharlestonRelocationExperts.com to list your home for sale or to purchase a home in Charleston, Goose Creek, Summerville, North Charleston, Hanahan, Mount Pleasant and the surrounding areas in Charleston County, Berkeley County or Dorchester County. The Charleston Relocation Experts Team specializes in relocations, first time homebuyers and creating marketing exposure to sell your home in the Charleston SC Real Estate market. View all homes for sale at www.myCharlestonMLS.com

 

Michele Reneau, ABR, GRI, CRS

www.CharlestonRelocationExperts.com

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