BUYING UP IN A WEAK MARKET vs. BUYING UP IN A STRONG MARKET, Making Sense for Maryland Home Buyers

Calculation of Buying Up in a Weak Market in Maryland, Baltimore, Harford and Cecil County

Compared to Buying Up in a Strong Market in Maryland, Baltimore, Harford and Cecil County

First - Moving Up in a Weak Market

Sale Price of Current Home                                        Sale Price of Future Home

$400,000.                                                                    $600,000.

The difference between the two properties is $200,000.

Moving Up in a Strong Market

This example assumes a price increase of 10%. Prices have increased at rates as high as 24% annually in our market. The market area average annual increase over the last 30 years is 6.9%.

 Sale Price of Current Home                                      Sale Price of Future Home

$440,000.                                                                    $660,000.

The difference in price between the two properties is $220,000.

In this example it costs an individual $20,000 more to move up in a strong market than it does in a weak market.

Real Estate markets fluctuate daily in Maryland just as all economic markets do. The time for a buyer to get the best terms is when the seller is not experiencing much interest.  The time to buy is when no one else is. Experienced investors know that.

Rates are very low now. Changing Rates can change the picture a lot.

Interest rates play a part in the cost of home buying as well.

On a purchase of $600,000. with a 10% down payment and a mortgage of $540,000.  on a 30 year fixed rate mortgage the principal and interest payment would be:

At 7%                  $3,593.

At 6.5%               $3,413.                   

At 6%                  $3,238.

At 5.5%               $3,066.

At 5%                  $2,899.

For example, the difference between a payment at 6% and a payment at 6.5% costs $175. a month or $2100 a year!

The monthly payment at 6.5% (for example) on the extra $20,000 one might have spent in a strong market would be $126. more a month than what might have been paid in a weak market.  This is $1512. a year!

The conclusion is that it is better to buy in a weak market and it is even more advantageous to buy when rates are low. Both of those conditions exist right now.

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