To quote Gary Keller, “you will never know that you were at the bottom of the market until it is on the way up.” For those who have been waiting to purchase a home because they were sure the market had not bottomed out might want to reconsider. The real objective in any market is to buy smart. And that takes knowledge of the specific area you are interested in. If there was ever a time to employ a good Realtor with great market knowledge it is now. Below is a excerpt from Gary Keller’s book, Shift…
Buyer who choose to wait “until prices come down more” are also gambling that interest rates will hold steady or drop. What is not widely understood is the impact interest rates can have on the real monthly costs of homeownership. Even a 10 percent drop in home prices is immediately nullified by a mere 1 percentage point increase in interest rates on a 30 year mortgage loan. By the way, this relationship between interest rates and home pricing remains essentially the same at any price point.
|
Buy Now Or Wait? |
Scenario 1: |
Scenario 2: 10% Interest rates increase by 1.0% |
|
Home Price $200,000 |
Home Price:-5% |
Home Price:-10% |
|
Interest Rate 6.0% |
Interest Rate: +0.5% |
Interest Rate: +1.0% |
|
Payment $1,199 |
Payment $1,201 |
Payment $1,198 |
Figure 47 Even a slight increase in mortgage interest rates can offset a significant drop in home prices. There is little to gain in this scenario and much to lose if home prices rebound or rates jump.
You want your buyers to avoid trying to time the market. Not only does it almost never work, but it certainly can’t be done from the sidelines. They have to be in the market to take advantage of the market.
Words taking from the book Shift, written by Gary Keller
Written by Mary Beth Harrison, Keller Williams Realty
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