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"But if I wait a while, home prices will come down even more!!"

By Pat Haddad, ABR, CRS, ePRO, GRI

Real Estate Agent with Keller Williams Indianapolis Metro NE RB14023803

August 25, 2010 03:23 PM

With much uncertainty in the economy and the housing market, House Floating Dollars many first time home buyers are waiting to see if home prices will come down even further. This might not be the best strategy.

According to data from Freddie Mac, mortgage interest rates for a 30 year fixed mortgage dropped to the lowest in 30 years. At an average of 4.6%, rates are at an historic low not seen since 1971 when Freddie first started gathering this type of data.

To see what this can mean for buyers sitting on the fence, let's take an average priced home at $179,000. Buyers putting 20% down on a thirty year fixed mortgage, with a rate of 4.75% will have a monthly payment of about $749.50.

If those buyers choose to wait until the price of their dream home comes down, it may cost them. If the sellers reduced the price substantially to $161,640 and interest rates on a 30 year fixed rate mortgage only jumped by a mere 1%--and we all know that once rates start to climb, they climb by more than 1%--- their monthly payment would jump to $754.63 per month. So yes, they got the house for much less, but it cost them rather than saving as they had hoped!

Confused Home Buyers MAKE SURE YOUR CLIENTS ARE INFORMED AND UNDERSTAND THE MATH!!

THERE SIMPLY HAS NEVER BEEN A BETTER TIME TO BUY A HOUSE!!!

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Larry Bettag

Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL

Vice-President of National Production

I'm with you. It may be better down the road, but who knows. What I do know is that there is not better time than now.

Aug 25, 2010 03:24 PM

Mike Wong

Keller Williams Realty Southwest - Sugar Land, TX

Realtor: Commercial, Residential, Leasing, Invest

Great post Pat! We discussed this same topic in our team meeting today and how we need to educate our buyers to get them off the fence.

Aug 25, 2010 03:30 PM

Matt Grohe

RE/MAX Concepts - Des Moines, IA

Serving the metro since 2003

Pat: It is a good time to be sure but "never better" or "best" time claims can be fraught with peril. Now is a very good time time to a home and that's a safe statement to make.

Aug 25, 2010 03:40 PM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Pat - I've been having this conversation with my prospects for months. Regardless of how low rates are today, at some point, they are going to go up - that is guaranteed. They can't stay low for very much longer.

Aug 25, 2010 03:43 PM

Dale Baker

Baker Energy Audits and Commercial Properties Inspections - Claremont, NH

New Hampshire Relocation Real Estate Information

Howdy and evening to you Pat

Pat, some folks don't stop to look at the overall picture sometimes. One thing is for sure, you take the time to let the folks you are work with get all the info they really need. To be able to take in the whole picture, thats its not all best to keep on waiting.

Have a good one
Dale in New Hampshire

Aug 25, 2010 03:47 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Larry---unfortunately, none of us have crystal balls, so all we can work with is the here and now. Interest rates are almost unbelievable!! Hope you are getting some good refi business!!

Aug 25, 2010 03:47 PM

Joe Homway

Exit Realty Premier - Springdale, AR

My crystal ball broke when I threw it on the floor but I still tell clients find the house not the deal, the dealing comes afterwards and interest rates and terms of the contract will save them more over their term of the loan. The other key is re-sale, we all know what was paid for any property and it may haunt you in the future.

Aug 25, 2010 03:48 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Thanks Mike! We discussed this topic in my office several weeks ago. If we don't inform the public, who will? Good luck getting the word out there!

Aug 25, 2010 03:49 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Hi Matt--Point well taken, but I don't feel as if I am taking too big of a risk stating historical facts. Rates have never been lower and values are down too. Guess only time will tell if things get better or worse!

Aug 25, 2010 03:54 PM

Ted J. Macy

Top Agents Atlanta Metro - Milton, GA

Good Post Pat, sometimes people don't see the entire big picture, only a portion. The whole picture can make a difference in their purchase and their lives.

Aug 25, 2010 03:55 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Donne--We will just keep on spreading the word, won't we? I agree with you----flipping the saying to 'what goes down, must come up' and rates eventually will climb back up!

Aug 25, 2010 03:57 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Thanks for stopping by Dale! I do agree that we have to look at the whole picture and provide all the information we have to those who count on us for this huge purchase they will make. You have a good evening too!!

Aug 25, 2010 04:01 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Well Joe you can't throw a glass ball on the floor and expect it to come out in one piece! Two very good points you make---advising them to fall in love with a house and worry about the deal later and the bargain you get today, someone else will want to be their bargain in the future---even though we REALTORS know what someone paid for a home is the worst way of determining its current value!

Aug 25, 2010 04:08 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

So true Ted! So much to evaluate and think about. More reasons to be sure to work with a professional who understands the current market and conditions!

Aug 25, 2010 04:10 PM

Debbie Atwood

Century 21 Real Estate Center Everett, WA - Everett, WA

Real Estate Broker

Good information Pat and I agree it is so important to point these stats out to our clients so that they can make educated decisions

Aug 25, 2010 05:35 PM

Kathleen Daniels, Probate & Trust Specialist

KD Realty - 408.972.1822 - San Jose, CA

Probate Real Estate Services

Pat, I actually had a crystal ball however it broke in the 1989 earthquake (LOL) Historical trends are great predictors … you are spot on here … higher interest rates may bump a lot of people right out of the market!

Aug 26, 2010 05:11 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Debbie---Sometimes they just need a little help to make the right decision and a little push to move forward!!

Aug 26, 2010 05:20 PM

Pat Haddad, ABR, CRS, ePRO, GRI

Keller Williams Indianapolis Metro NE - Carmel, IN

Carmel, Fishers, Westfield IN Real Estate Expert

Kathleen---Maybe a little glue? That crystal ball sure would come in handy right now! Rates are already so low that there seems to be only one direction left!!

Aug 26, 2010 05:24 PM