There was a great article in Time Magazine last month by Dan Kadlec, --titled “Ignore the Headlines!”The article identified something I have been talking about since the beginning of the year, “finance costs will rise as the economy recovers, so trying to time real estate might not pay off.”The article then proceeds to give an example of a rise in rates of just 1%.If home prices were to drop by 10% over the course of a year, but rates rise by 1%, the end result will be a wash and renters would have waited a year and saved nothing.If rates increased by 2%, the monthly mortgage payment would be significantly higher.Rates will inevitably increase to stave off inflation.In 2000, conventional rates were 8% and in 1990 they were at 10%.So, do NOT wait for the bottom of the market.Instead, enter the market when the conditions are most ideal: low rates, tons of choices and plenty of motivated sellers.Go find the best home for your family.Also, be aware that for banks in charge of foreclosures, they have the upper hand and it is a seller’s market for them.In looking at short sales, many already have an offer submitted to the lender for their approval.Also, the higher the price range, the less motivated sellers are due to financial circumstances.73% of distressed properties are below $500,000 and 94% are below $750,000.This is worth repeating in every single one of my reports - take considerable comfort in the fact that Southern California real estate has always been a historically wonderful long term investment.
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