Last week we explored the concept of the cost of waiting to enter the housing market - whether you are a first time home buyer, a person looking to buy a larger home, a smaller home or if you are an investor.
Each day on Wall Street, mortgage interest rates - like stocks - adjust according to trading of Mortgage Backed Securities Bonds. The activity in this market can be as intense and cause changes in mortgage rates instantly and also - often.
Who Knew?
A most important consideration of many looking into buying real estate now is - the monthly payment. What constitutes the monthly payment?
The price of the house, the loan amount, and the interest rate!
The world economy is shifting - from recession to recovery. Historically, recoveries from recession are not linear. There is good news: corporate earnings up year over year; unemployment claims down (but still over 330,000 filing claims last week). And there bad news:
The final S&P Case-Shiller Home Price Index for the year was also released last week. According to the report, home prices in 20 metropolitan cities fell 0.8%, which was below the 0.1% improvement that was expected and the sharpest year-over-year decline in a year. This was not a good report, and when you consider more foreclosures coming to the market, it is likely that home prices could remain under pressure for part of 2011. The stubbornly high unemployment has played a role in seeing meaningful growth for the housing market.
The good news with bad news is that it can be good for mortgage interest rates:
That means home loan rates are still unbelievably low as we start the new year.
What about the Case-Shiller Home Price Index? This index measures 20 metropolitan areas and the housing prices month over month. 16 of the 20 saw varying house prices decline. Only 4 (3 areas in California and Washington DC) saw housing prices increase with Washington DC leading the pack by an increase of 3.7%!
Remember the cost of waiting analysis and the four scenarios that could happen and how each may impact monthly payments: 1. Prices stay the same; interest rates stay the same 2. Prices go down; rates go up 3. Prices go up; rates stay low 4. Prices go up; rates stay the same In Washington, DC we see prices going up. As rates remain low - and volatile - the time to act may be now. To assure the lowest monthly payment, buying while prices are relatively low creates the greatest opportunity to sell high! That is how wealth is created. For a personalized analysis of The Cost of Waiting, contact Cindy Fox with Mclean Mortgage - cfox@mcleanlending.com
Comments(3)