Ignore the news and tune out the chatter "the sky is falling" is easier said than done. If we are not in a
recession, then we act like we are. We have allowed fear to become the overiding factor causing many to do nothing when it comes to investing in real estate. One should remember that real estate is a long term investment and has proven to be one of the best investments overall. Of course, there should be some skepticism and caution given the current outlook of our economy, but skepticism and caution should be tempered with reason and logic and not become out and out fear.
From Right on Your Money by Dan Kadlec in Time Magazine, Dan writes, "There has rarely been a moment in history when you couldn't scare yourself into doing nothing. ...When prices are falling, few people have the discipline to buy a house... but those who do pull the trigger excel in the long run."
It seems we are experiencing one of those rare moments where many potential home buyers have been scared into doing nothing. The Federal Reserve is cutting short-term interest rates faster than any other time in history and rate cuts tend to improve the economy in time. Yet home buyers continue to hesitate. The end of the recession, if there is one could actually be in sight.
If you have good credit and plan to stay in a home for at least five years, then it's time to get serious.
Now is the time to buy before interest rates start to rise and they will sooner or later. When they do, this will wipe out any gain you think you might have by a further drop in prices. Also, home prices may stabilize and sellers may become less willing to negotiate.
Dan Kadlec uses this example:
Today's Typical Home Price: $218,900 20% down payment and a 30 year fixed rate mortgage
Current rates after recent declines 5.5%
Monthly Payment: $994.31
Cost in 12 Months?
Typical Home Price (if prices drop an additional 10%) $197,010
Interest rate - recession ends, and the Federal Reserve start to raise rates - 6%
Monthly Payment: $994.94
Conclusion: If you waited a year to buy, you would have saved nothing !
Note: Interest rate quoted to me by a local lender on 2/28/08 was 6.375 (already higher than what Dan used in his example)
Single Family Residential Home Sales - Fannin County - February 2008
Sales were down almost by half in Fannin County in January 2008 compared to January 2007. But, February 2008 is showing a different picture. Sales are almost even with 24 residential single family homes sold compared to 27 single family homes sold in February 2007 as reported by the Northeast Georgia Board on March 1, 2008. Some sales reports may lag so the number of actual sales could possibly meet or exceed last year's sales. The gap is closing!
Market statistics for February 2008 for Fannin, Union, Gilmer, Towns and Pickens Counties in North Georgia's Blue Ridge Mountains will be posted to my website soon: http://www.move2northgeorgia.net/
Donna Yates, Georgia Realtor, serving home buyers nationwide. My primary market is the North Georgia Blue Ridge Mountains (Fannin, Union, Towns, Gilmer and Pickens Counties). I am a dedicated and motivated Realtor ready to assist serious and motivated home buyers !
Edited: March 19, 2008
As a professional Realtor and one who is dedicated to my profession fulltime, I do not arbitrarily nor irresponsibly report that it's a good time to buy if: (1) I do not believe it is true and (2) I do not have facts to support what I am writing so please talk to trusted Realtors in the market in which you are interested. Each market is different and they are local. If I thought it was a bad time to buy in the North Georgia market, believe it or not, I would say so. Afterall, I have had to tell several sellers that it's not a good time to sell over the past year, why would I not be just as honest with buyers? I study the market carefully, interact with appraisers, investors, lenders and other realtors on a daily basis. I live, work and play in my target area and there are many factors to consider about the market than just a computer generated analysis. Trust is my trademark. If you want a truthful Realtor, one who is straightforward and realistic about the market, then contact me. I look forward to hearing from you.
Also, read more from the Georgia Realtor's site at the following: http://www.garealtor.com/Newsstand/IndustryNewsandNotes/tabid/226/Default.aspx
You can read the article located at the site above in it's entirety. Here is a small bit for starters:
By John Adams
Contributor - The Atlanta Journal-Constitution
Published on: 02/17/08
The first house we ever owned was actually a duplex. The previous owner had converted the screened porch into an efficiency apartment. Because the big side was under a lease, I moved into the efficiency with my young bride, her cat and our big dog.
One reason I was so anxious to buy was that, in 1978, the long-term fixed rate was sitting at 8 percent, and I sensed a rate increase in the air. I remember that it was wintertime, and the apartment was rather cool, but the seller was a friend and agreed to accept a price of just $40,000 for this old duplex.
It was time to make a move. I still own this property today. It's located near Emory, and is easily worth 10 times what I paid in 1978. It's one of the best investments I've ever made.
Many of you have been sitting on the fence, waiting for the right time to buy real estate. You don't have to buy anything, but you think that if you could get a good enough deal, you might be ready to move. Well, please consider this column to be your engraved invitation. I believe there are compelling reasons that you should seriously consider making your purchase in the next few weeks, and I've got three main reasons for sounding the alarm:
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