Are you one of those real estate buyers waiting to buy until the market "bottoms out" to be sure you get the best deal? If so, maybe you should rethink your strategy.
The February 25, 2008 issue of Time Magazine has a great story on page 54 that makes a great case for buying now. To be more specific, if you compare a mortgage payment on a typical house at today's price and interest rate with the same house at a later date with a devalued price and the interest rate then, you might see that it is best to buy now. Let me give you an example: the average home in the Springfield, Missouri Multiple Listing System (MLS) sold for $147,800 in 2007. If you bought that house on a 30 year loan with 20% down and at a 6% interest rate, your monthly principal and interest payment would be $708.90. If you waited 6 months and that house went down in price 10% due to market conditions to a price of $133,020 (just what you were waiting for, right?), and you bought it with the same 30 year 20% down loan but a higher interest rate of 7%, your principal and interest payment would be $707.98. Didn't really save anything, did you?
The logic behind this, like the Time Magazine article says, is that the conditions that cause the average home values to stop sliding are the same conditions that cause mortgage interest rates to climb. So any way you approach it, it is kind of a gamble. If you wait for prices to drop, you're taking a chance interest rates don't increase so much that your lower purchase price is offset by higher interest.
Real estate sure is fun isn't it - just like the ice covered roads this morning in Springfield, Ozark and Nixa. It's been a good day for blogging and for buying real estate!!
Rick
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