Boy, oh boy - watching the news is not a fun thing anymore, huh?
The economy stinks, the stock market stinks, jobs are being lost, the sky is falling! So how's the real estate market? It's somewhat the same as anything else...If you have to sell something (products/goods, stocks, a home, etc.) it's going to be tough for you to find a buyer. Is it impossible? No - but are you going to get top-dollar? You better believe you're not.
However, there is a bright side...if you walk into a department store these days, you're likely to get an unbelievable deal on darn near everything in the store! If you want to buy stocks, you're going to get an incredible deal. If you want to buy a car (ESPECIALLY AN AMERICAN-MADE CAR), you're going to get a better deal on that car than you have ever been able to get in your lifetime.
THE SAME IS TRUE FOR REAL ESTATE.
Supply is at an all time high, so you have much more to choose from than you would if the market didn't favor buyers.
Sellers are more motivated than they've ever been in history to sell their home. Banks are overrun with foreclosures and are willing to give them away for (relatively speaking) pennies on the dollar. Many builders are in rough shape and are willing to negotiate their prices/terms much more so than at any time in recent history.
Interest rates are at an all-time low. A few months ago, I was writing that interest rates were at "near-historic" lows, but now they're truly lower than at any time in history. The National Association of Realtors is reporting that just before Christmas, Freddie Mac said the national 30-year rate fell to 5.19 percent - the lowest on record since the series began in 1971 (but guess what? they're even lower for us in Georgia!).
Because interest rates are so low, you can afford a much more expensive house than you could've just a few months ago. For instance, let's say you want your principal and interest to be around $1,050.00 a month. If your interest rate is 6%, you can purchase a $175,000 house. However, if your rate is only 4.5%, you can purchase a $208,000 home and you'll have the same $1,050.00 monthly P & I payment! As you probably know, that extra $33,000 will get you quite a better/bigger/nicer home. Even greater, because the market is so strong for buyers right now, you're going to get a home that's actually worth much more than $208,000...and when the market comes back, you'll be able to sell that home (should you choose to) at or above market value and cash in on your investment!
Of course, if you just want to take advantage of the low rates and save money when you buy a house, you can buy your $175,000 house and your payment would only be $866.00! That's a savings of $184.00 a month (or $2,200 a year)!
Let's review: Here's a brief summary of the advantages you will enjoy if you buy while interest rates are low and supply is high as compared to high interest rates and low supply...
Low interest rates and high supply...
You can get a $208,000 home at 4.5% for the same monthly payment as you would've paid for a $175,000 home at 6%.
Because supply is so high and sellers are selling at deep discounts (especially in the foreclosure or short sale market), you'll likely get a $230,000 or $240,000 (or more) home for your $208,000 purchase price. When you later try to sell the home, you will be in a very good situation.
However, if the conditions are reversed and interest rates are high and supply was low...
You would only be able to afford a $175,000 home for the same monthly payment at a 6% interest rate.
In a market where supply is low, sellers have the advantage and can get top-dollar for their home. Even if you buy a $208,000 home, you're likely to get a home that's actually only worth $190,000-$200,000. When you later try to sell the home, you're going to be in trouble.
OH BY THE WAY, DID YOU SEE THAT FORBES JUST DECLARED ATLANTA TO BE ONE OF THE TOP 10 CITIES IN THE NATION IN THEIR "BEST LONG-TERM HOUSING BETS" LIST LAST MONTH?
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