The Bottom is Coming! The Bottom is Coming! There's more to it than that.

By
Real Estate Agent with Coldwell Banker Realty-Schweitzer Mountain, Sandpoint, Idaho SP37235

 

dogIt was a busy day today.  I showed some clients around the mountain (SCHWEITZER MOUNTAIN, that is) and they were duly impressed. They’re great clients and very savvy to the declining market scenario.  The question is, how long do they wait to find the bottom of the market.  ...and when it arrives, will they realize it?

I certainly am not going to attempt to force their hand in any way.  I did need to point out that there is another scenario they need to grasp when making the decision to purchase:

 

Interest rates play an important role in a buyer’s decision.  The bottom may finally arrive next summer but will interest rates remain at today’s prices?  If the rates go up 1% (which they are purported to do), then the “bottom” may, in fact be today.

 Example:

   Today’s $500,000 home loan at 4.75% = $2608/mth (excluding tax & ins.)

 

   Tomorrow’s $450,000 home loan at 5.75% = $2623/mth (excluding tax & ins.)

 

burning dollarThis assumes the bottom is another 10% lower than today.  What if interest rates go up and the market stays at today’s $500,000 price?  ...the buyer’s payment goes to $2918/mth.!

 

Sometimes our buyers forget to look at the consequences of loan rate fluctuation when deciding on the home to purchase.  It is good to keep them aware of this side of the equation.

 

Did my clients write...no.  Just another day of real estate on the "mountain".

 

 

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Rainmaker
116,666
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

Great point, Kent. Thanks for the crystal clear example!

Jan 28, 2011 10:43 AM #1
Ambassador
1,041,795
Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Kent, you are so right about that. Now all the buyers need is a little more confidence in the job market.

Jan 28, 2011 10:37 PM #2
Rainer
72,107
Renee Marrs Caperton
Marrs & Associates - Corsicana, TX
Realtor - Corsicana Texas Real Estate

It is one vicious circle!  I think a lot of buyers just don't understand that they can get so much more of a house when interest is this low.  Now is the time to jump in!

Jan 29, 2011 12:37 AM #3
Rainmaker
205,105
Kent Anderson
Coldwell Banker Realty-Schweitzer Mountain, Sandpoint, Idaho - Sandpoint, ID
from Schweitzer to the Lake

Hi Margo - I make no predictions.  It just seems like now may be the time for some of my buyers.

Hey Andrea - That is the REAL problem.  The jobs issue will take awhile.

Hi Renee - So true!  Thanks for checking in.

Jan 29, 2011 02:34 AM #4
Rainmaker
861,100
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

GOOD MORNING KENT!  Sorry they didn't write ... buyers who don't buy will realize this later on down the road and WILL say - dang I should have ....!" -- G

Jan 31, 2011 10:55 PM #5
Rainmaker
205,105
Kent Anderson
Coldwell Banker Realty-Schweitzer Mountain, Sandpoint, Idaho - Sandpoint, ID
from Schweitzer to the Lake
Hi Gab - So true. I think they'll buy. Sometimes it just takes some time. Have fin in the Tucson sun!
Feb 01, 2011 02:34 AM #6
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Rainmaker
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Kent Anderson

from Schweitzer to the Lake
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