As we move into the fourth quarter of 2011 there have been good news days and bad news days. Recently the good news day came with the release home prices had moved up for the fourth straigh month.... The bad news (Or Good News if Your buying) is interest rates continue to go down and this may produce record inflation over the next decade. As economist talk about how this will continue to kill the American Economy; I want to try and find a silver lining. For me this lining comes in the form of what home buyers can get now and have later...... Cause at this very moment if your buying a home you can have your cake, eat it,.......AND EASILY PAY FOR IT..... (Note I'm not an economist nor do I claim to be, I do have a B.S. in Math Education and this number are pretty startling to me)
1. We have all heard it and its true...Even though home prices have went up for 4 straight months there still way down from record highs. You can get almost double the house now than you could a few years ago for the same amount of money. This also holds true for building a New Home. Cost of Building is way down and cost of land has went back to pre 2000 levels. You want a home on a prime lot? (View, Water Front, etc.)...or a home with large acerage?...or just a home in a specific location....Now is the time you can afford it!
2. So fact one is not new news for you Real Estate agents or buyers in the market and to be honest this second fact isn't either. But the number is amazing..... As a buyer you can get financing on a 30 year note for less than 4% interest.... WHAT???? Thats insane.... Compare your payment amount at 4% interest and 6% interest on a $200k loan and you will save almost $250 a month.... Put that $250 a month back on top of your payment, and pay your house off in less than 18 years. Interest rates have to go up sometime so why not lock in at the low 4%?
3. Banks, Asset management companies, and sellers are offering crazy good incentives to buy their homes..... Pay no closing cost, get 100% loans, or buy down your interest rate lower than the insanely low 4%. All these are being offered and all of these should be taken advantage of. Again just another reason why buyers can get what they want. Even builders have the ability to offer these incentives on new homes just being built or custom homes you design.
4. OK...Now for the fact you have been waiting for....This is a hard one for the average person to think about and I must say I can't explain the entire concept behind it in one blog nor will I try......But here you go.... According to economist inflation is going to happen... Everywhere you read, listen, or watch its going to happen period.... Now inflation is not bad in every way, especially if you are home buyer or the United States Government at this point (The Government is actually making it happen) ... Basically Inflation means the dollar in the future is going to be worth less than the dollar today.... This also means their will be more money in the economy and on the market than there is today.... So the average person will actually make more money in the future than they do today; although it is worth about the same....So if a job position makes $30k in 2011 that same position (everything being equal) will make $45k in 2021. This will also mean everything goes up in price, groceries, gas, and yes homes..... But there is more money on the open market and you should be able to easily pay off the $200k home you bought in 2011 simply because there is more money in the market(Even though its worth less).......... I know this has confused everyone but I can answer question about it........ In THE SHORT EXPLANATION....YOU ARE HEDGING AGAINST THE DOLLAR WITH YOUR BEST INVESTMENT EVER.......THE HOME YOU WANT WHERE YOU WANT IT.....And the dollar being worth less in the future will actually help you pay for your home and mean you pay less than you thought!
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