Real Estate advice I gave 12 years ago still stands, check it out...

By
Real Estate Agent with Berkshire Hathaway HomeServices 01238708

 I wrote a blog post in 2010 how ironic, twelve years later I might not need to change much to it? Let me know your thoughts    

https://activerain.com/droplet/5cXM

 

The first step in home ownership is to figure out how much you can afford each month. Many first-time buyers look at their current rent and base it  what they can afford. The key is to know how much one can afford. Once this is determined the rest is easy.

The key is to know what the budget is in the long run. Do not spend every penny of your income to your housing budget. Remember you still need to eat and there are unexpected costs, or should I say unplanned costs that you need to think about. Even if you need to cut back on your down payment for the sake of having a reserve in your bank account for emergencies it is worth doing that.

www.endrebarath.com

In today’s market my advice is to get a Fixed Rate Mortgage 20 to 30 years, locked in. Keep in mind if interest rates drop in the next five or six years you can always refinance. My suggestion is buy now and lock in your interest rates, because my Crystal ball anticipates rate increases.

Let me illustrate my point why you should buy now and not wait:

 

Let's say the Fed decides to raise the interest rate. Let me illustrate the potential shift in the housing and mortgage markets. The cause and effect is very clear (see my illustration):

Today you buy a $1 million dollar home:

Sales Price                                                                             $1,000,000.00

Down Payment                                                                     $   270,250.00

Loan Amount                                                                         $   729,750.00

Monthly Payment on a 30-year fixed at 5.125%              $       3,973.00

 

Now let us say if prices drop 10% in home values and today's $1 million dollar home sells for $900,000.00, this seems very reasonable.  The buyer would think well of course I should wait. Now let me add into this scenario that the interest rate increased only by a modest 1% per cent. Let's look at the numbers.

 

Sales Price                                                                            $900,000.00

Down Payment                                                                    $200,000.00

Loan Amount                                                                        $700,000.00

Monthly Payment on a 30-year fixed at 6.125%             $    4,253.00

 

Anyway, you get the idea, why it is better to buy today than wait until prices drop. I find it ironic this was my advice 12 years ago and some people listened, and many did not.

So, with that said the choice is yours. Do you want to live and take your chance as the landlord take advantage of your insecurity?

 

www.endrebarath.com

 

Wishing you a safe and healthy life and I look forward to your comments. If you are looking for a knowledgeable, focused and goal-oriented Realtor in the Beverly Hills area who will help you achieve your Real Estate goals, please reach out to me directly! If you are looking for a pet friendly Beverly Hills Realtor who can handle and sell the most difficult properties that no one else could, please reach out to me directly!! If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 ( m) homes@endrebarath.com or visit one of my websites at https://www.endrebarath.com I contribute a portion of my commission to local animal rescue organizations. Endre Barath, Jr. Realtor at Berkshire Hathaway HomeServices California Properties DRE#01238708

 

 

 

 

 

Comments (26)

Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Endre,

Solid advice just like the quote from Rose Kennedy stands the test of time. There are business cycles and experienced agents will anticipate, pivot, adapt and do well.

Oct 02, 2022 06:10 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I think that advice will always prove to be solid advice and I am sure that you will adapt it a bit for the market of the present day.

Oct 02, 2022 06:11 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Endre you are right, this blog is as relevant today as it was when you first wrote it.

Oct 02, 2022 01:12 PM
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Rock solid advice, Endre. You know I just had this conversation with two buyers this week - I also had to illustrate it because they thought I was off my rocker! 

Oct 02, 2022 02:17 PM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Endre Barath, Jr. - they say experience is your best teacher. After reading your blog post written in 2010, I would say the information you posted is as relevant today as it was back then. Over the years of reading your blog posts, I see you as a man of strong principles and ethics. 

Oct 02, 2022 10:06 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Grant Schneider  hard to believe it was 12 years ago, and indeed it is not an easy business, Endre

Oct 02, 2022 10:38 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Kat Palmiotti  sadly we are now looking in the 6.6 range, Endre

Oct 02, 2022 10:39 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Michael Jacobs  you make an interesting point, my take is we do not learn from history and I am a history buff, Endre

Oct 02, 2022 10:40 PM
Michael Jacobs

Endre Barath, Jr. - an element of surprise, a twist or a turn seems evident in many, maybe most, parts of history.  Perhaps the concept of unintended consequences is the lesson.

Oct 03, 2022 04:45 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Carol Williams  sadly it is a numbers game and many lack the math skills, Endre

Oct 02, 2022 10:41 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Nina Hollander, Broker  we are on the same page, Endre

Oct 02, 2022 10:42 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Wayne Martin  we are on the same page, Endre

Oct 02, 2022 10:42 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Dorie Dillard Austin TX  we are on the same page and I thought it was interesting that my advice was solid 12 years ago too, Endre

Oct 02, 2022 10:43 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Brian England  12 years ago and today the advice stands on its own, Endre

Oct 02, 2022 10:44 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

George Souto  my friend scary but true, ENdre

Oct 02, 2022 10:45 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Debe Maxwell, CRS  feel free to use my illustration in the future, Endre

Oct 02, 2022 10:46 PM
Debe Maxwell, CRS

Of course, it was the same example I used, Endre Barath, Jr. - was there really any doubt about that?! LOL

Oct 02, 2022 10:50 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Patricia Feager, MBA, CRS, GRI,MRP  your kind words are always welcome, thank you, Endre

Oct 02, 2022 10:47 PM
Anna Banana Kruchten Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Endre I had this conversation quite often back in 06 to 08 with clients. Some refused to listen and waited until prices dropped dramatically here.  Others still thank me today for encouraging them to 'deal' with reality not wishful thinking.

Oct 03, 2022 11:09 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Anna Banana Kruchten CRS, Phoenix Broker  I am working with two buyers both repeat clients and ironically they are staying on the side lines as I try to tell them why they should jump into the purchase of a new property one is around $850k the other is around $4.5 million both have excuses.... not the right property as interest rates keep climbing....Endre

Oct 03, 2022 10:09 PM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

As Always, your advice is sound and true!  People are nervous so your calming influence should help them make the right choice! It is going to be a rough patch for a while for average home buyers. 

Oct 06, 2022 12:54 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Went yesterday shopping. Stop at a take out. Ordered 2 plates and had a coke for drink. Total bill was $40+ dollars. This is what I call inflation.

Oct 06, 2022 07:25 PM