Many buyers are “sitting on the fence.” They don’t know whether there will be a “double dip” in the economy. They feel they missed out on the tax credit incentive etc. While these and other issues, like job uncertainty are keeping many away from making the commitment, there are also excellent and unprecedented reasons to buy now.
Sellers too, have been hesitating, concerned that they won’t receive a “reasonable price” for their homes. They seem to want to wait until prices have come back to pre-bubble bursting times. There is a belief (wish, desire) that things will recover and do so pretty soon. Not only that, many aren’t considering the fact that while their home will rise in price, sometime in the future, so too will the property they want to buy, as well as the cost of their mortgage (when rates rise as well.) Consequently, there are excellent reasons for some sellers to market their homes now as well.
As reported by the LA Times below, interest rates are the lowest they have been in the 39 years Fannie Mae has been tracking these rates.
Prices as most are aware, are back where they were 5-7 years ago and have either stabilized or begun to inch up. With the “affordability index” at its highest point in over 10 years, there are more potential buyers available.
It takes a simple math calculation to document to people how much they will save by buying now @ 4.5% then waiting a year or two when interest rates move up to and over 6%. It will make it even more expensive if property values increase a slight 3% over the next few years.
Below the link to the LA Times article is a link to the mortgage calculator I used in my example.
http://www.mortgagecalculator.org/
SAMPLE COMPARISON – BUY NOW @ CURRENT PRICES - BUY LATER (3% appreciation)
Sales Price today $600,000 $618,000
Loan Amount (20% DP) 480,000 494,400
Interest rate (4.5% current) 6.5% projected
Payment (30 year) $2,432.09 $3,124.74
Total interest paid $395,552.22 $630,579.95
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