OK, so in the same acceptance that even a broken clock tells the right time twice a day I find myself having to agree with The National Association of Realtors (NAR) at the moment. Now, is "for some people" a great time to buy!
I am not tying myself to their mast however. I still think home prices will continue to fall over much of the country. I think we are near the bottom of this cycle but we are not there yet. However, housing prices, home supply, home demand or even affordability have nothing to do with why to buy now.
The 800lb gorilla in the room which has been sitting quietly in the corner all this time is waking up and soon all hell will break loose. While it is hard to see where we will end up post "gorilla tantrum", one thing is for sure, mortgage rates below 5% will be long gone.
The US government has been borrowing, printing and spending money at an unprecedented rate. All with good intent although those that have been lending the money were beginning to get a little worried. On Thursday of last week that concern changed to fear. International investors began to sell US Government Bonds into the market at a rate which the Fed simply could not buy up in time to prevent bonds from taking a dive. Long term interest rates are beginning to soar which tends to indicate that mortgage rates will have no choice but to rise in the near future. I am sure the Government will do all they can to prevent interest rates rising but I believe the market is simply too powerful for the government to control.
My first ever mortgage was at set at 7.5% APR back in 1996 which at the time seemed a pretty good deal. I suspect it won't be too long before rates return to that sort of range. Anyone who can lock in a 30-year fixed at 4.5% should do it, and do it quickly. If you are selling a house, don't mess around. Buyers are going to disappear as rates rise and another wave of properties will flood onto the market as people struggling to hang onto their houses find their new variable rate simply too much to live with.
So for once. Listen to NAR, get off the fence and lock in for the long haul.
**Graph from Weiss Research
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