Is now the time to invest in real estate in Colorado?
If you have been asking yourself, "Is now the time to invest in real estate", you will want to read this information!
Buyers are looking for a guarantee they are buying at the best possible price, not necessarily buying at the best possible time or the best possible cost. Let me explain what I mean.
To answer that question, is now the time to invest in real estate? you have to recognize the cost of real estate, the home, is a combination of the sales price plus the mortgage interest rate you will be paying on the loan. A couple of specific reports of interest to our industry were published the other day which will help me make my point.
Home sales prices:
The National Association of Realtors (NAR) released their 4th quarter housing analysis survey. Within the report, they revealed that residential home sales increased 15.4% within the fourth quarter during the 3rd quarter. In addition they indicated that selling prices continued to be stable during the year:
The nation's median existing single-family selling price was $170,600 during the 4th quarter, up 0.2 % from $170,300 during the 4th quarter of 2009.
Any new buyer that delayed an investment could find comfort from the simple fact that selling prices haven't elevated. On the other hand, another report released that gives quite another perspective on the question of "Is now the time to invest in real estate?"
Home Mortgage Rates:
The Primary Mortgage Market Survey was in fact released by Freddie Mac pointing out that the 30 yr fixed interest rate home loan had been at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac stated:
"Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week...As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010."
Therefore home prices have remained stable but mortgage rates have increased significantly during the last 3 months. What does that mean for a buyer thinking about purchasing their home this year?
The home price is the same. It simply costs more. Keep that in mind when looking for an answer to your question: Is now the time to invest in real estate?
But here's what you really need to understand: all lenders qualify on the cost of the home, not the sales price of the home. Meaning we base your maximum qualification based on your proposed monthly payment, not off the sales price. So continuing to delay might mean you have to settle for a smaller home tomorrow vs the larger home today!!
So, is now the time to invest in real estate? What does that mean?
Regardless of whether selling prices drop 10% this year, the cost of your home increases in the event that mortgage rates increase more than 1%. Buyers really should not be concerned where prices are. Rather, you must be concerned about what the overall costs might be later in the year.
If you don't currently own a home, it is the time to invest in real estate.
If you do currrently own a home, it is the time to invest in more real estate!
Call us today and see if you qualify to start creating your real estate investment portfolio. The timing couldn't be better, as interest rates dipped down a bit yesterday.