Is Now A Good Time To Buy Or What?
Posted on November 27, 2010 by JA/LEX Real Estate in Shippensburg real estate agents Shippensburg realtorsIs Now A Good Time To Buy Or What?
Brought to you by: JALEX Real Estate Services
Of course it is, what would you expect me to say? I do sell real estate! Really though, there are a number of reasons that you should consider buying a home right now if you have been thinking about it. First, let’s talk about why you would not buy a home right now. “Interest rates have been falling and who knows how low they will go right? Maybe if we wait for another month the rate will be less.” Or, “home prices have steadily been falling in the Shippensburg area and if we wait till Spring I know they will be lower then they are today so i’ll get a better deal.” Or, “real estate is a bad investment look at what has happened to real estate values since 2006.” These are just three reasons that I have heard from potential buyers lately when discussing whether or not to purchase a home or investment property right now.
First lets talk about investing. All investments are cyclical. There are good times and there are bad times. The DOW Jones goes up and down daily as stocks are traded. Overall the trend is up but we all know that there are up days and down days. Commodities are traded too and they go up and down. There was a time when gold was not of as much value as it is now. If you would have bought $1000 worth of gold five years ago just think how much the value of that $1000 investment would be worth today! I have a chart that shows the value of a $100,000 investment made on 1/1/2000 today. If you had invested that $100,000 in the DOW Jones, today it would be worth (-)6%. The NASDAQ, The S&P Index (-)15% appx. The NASDAQ (-)26%. However, if you would have invested $100,000 in real estate in 2000 that value of that investment would be up 43%! In spite of a downturn in real estate prices you would still be ahead. Real estate is the best investment out there and that is what I work with. There is a conversation taking place somewhere right now where one spouse is saying to the other, “Can you believe what the house down the block just sold for?” And some day you will be sitting around the dinner table with your kids and one of them will say, “why didn’t you buy that place down the street when you had the chance Dad? You killed my inheritance!” We know this because it’s the same thing that we said to our parents right? And the same thing that they said to their parents.
Next, let’s talk about real estate prices and interest rates. And let’s shift our focus from price to COST. The cost to own real estate has never been so low! The record low interest rates make it so. Falling prices help too. I can show you actual quotes from newspapers, from experts throughout the country who all are indicating that the interest rate is as low as it is going to get. In fact, interest rates are going to begin to move upward over the next two years as the housing market begins to stabilize. Prices for real estate may go down some still depending on what real estate market you are in but the COST of owning a home is as low as it is going to be. Let me explain, a $200000 home at 4.25% costs about $983.88 per month. At 6.25% that payment, or the cost is $1231.43. the difference is $247.55 or $2970.60 per year. That is a significant savings for your family! Maybe if you wait till Spring the cost of that house could drop 5% to 10% but the COST of that house is still lower now than if you wait for a lower price but pay a higher interest rate on the mortgage. Seller’s, while you are waiting for the market to come back around and while you wait for your price remember, the house you are buying is owned by a seller who is also having to reduce their selling price to compete on the market. If you bought your home 7 years ago and it is time for a bigger home you probably paid a 7% interest rate on that home. Now you will buy your new more expensive home at 4.25% with a net result of lower monthly COST due to the lower interest rate. Waiting for your price is costing you time and money!
Of course there is much more to it than what I have mentioned here. At JALEX Real Estate Services we strive to be educated so that we can be of best service to our real estate clients in the Shippensburg and Chambersburg areas. If you have questions about this or any other real estate related topics please call me at 477-9326. We will be happy to help you by providing you the most accurate information and the best advice. Remember, all investments follow a cycle. Those who make a living following those cycles can become billionaires if they know what they are doing. The gentleman who predicted the real estate market collapse made millions in 2006 for his clients. His name is John Paulson or something like that. He is considered the EF Hutton of real estate investing. Here is what he has to say about investing in rel estate right now, “If you do not own a house, buy one now!, If you do own a home then buy another. If you have friends or family who do not own real estate then lend them money to buy now!”
