Many buyers are finding great values in todays housing market but others are still on the fence waiting for prices to prove they have bottomed out. Real estate prices are very localized and you should always look at supply/demand in addition to absorption rates to see where the trend might be heading next.
However, it is hard to deny that the interest rates right now are incredibly low. Some programs are at 40 year lows for interest rates.
The two key elements of Economic Modelling are:
- Barring government intervention (not likely);
- Basesd on a stable economy (we are not, nor is the global economy)
Therefore, I broke it down to my own simple analysis of why a person should consider buying a home today:
Based on a $250,000 mortgage you can get a rate today at 5% P&I = $1342.05 a month.
Even if prices drop 10% but rates jump 1% then, your payment will still go up to $1,348.99!
If prices do not drop but rates jump 1% then, $250,000 @ 6% = $1498.88 or $156.83 a month more in payments! If you are tight on your ratios, that higher payment could drop your qualifying amount down roughly $25,000 so you may not be able to buy the same home since you might only be qualified now at $225K!
I am always running analysis in my area from the Intermountain MLS to figure out trends of our market and our local absorption rates. If you would like me to run any special reports on housing supply and demand in the Boise Idaho area, please feel free to contact me!
Obviously, there are lots of different types of loans available and each buyer's situation is unique. Therefore, I suggest discussing my comments with your favorite lender to have them do full Good Faith Estimates specific to your needs and qualifications!
Comments (2)Subscribe to CommentsComment