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I get asked all the time whether or not now is a good time to buy. Honestly, now is a great time to buy. Never have I seen sellers more willing to negotiate than I do right now.
First of all, we have fantastic mortgage rates. These rates are at all time low. The average national interest rate is at 4.6% for a 30 year fixed rate loan while the 15 year rate is around 3.78%. Could we have imagined these kinds of interest rates just a few short years ago?
As an example, if you took out $300,000 loan for 30 years at a fixed rate of 4.6%, your payment would be around $1,537 per month. If you decide to wait another year hoping prices will go even lower and the rate rises to 5.7%, you would need home prices to fall another 12% to come in at same mortgage payment. That's more than double the price decline most are expecting to happen.
I truly do not believe that interest rates will be going much lower. In fact, most experts predict that they will be going back up to just under 6%.
I also don't foresee prices falling another 12%. If anything, prices are stabilizing. In many areas, prices are actually starting to inch upward again.
Mortgages for expensive homes will fall to $625K for a conforming loan very soon. Right now, lenders can do over $700K on a regular conforming loan without having to worry about getting into a non-conforming situation.
For buyers, there is also a lot less competition right now. It's the perception of many buyers that prices will fall lower, but most experts think there may be an additional 5% decrease at most in some markets.
In Connecticut, some areas are already seeing upward pricing trends. In other words, don't sit around waiting for the prices to adjust downward as well as the interest rates. They are so super good right now that it doesn't make sense to keep waiting it out in an already fantastic market.
For renters, new studies are showing that renting really isn't such a great deal right now. Demand for rentals over the last few years has increased because of the rise of foreclosures and less renters looking to buy. However, the supply has not kept up which means that rental prices have gone up. Why rent when you can buy a home and pay less each month?
Experts also believe that qualifying for a mortgage is likely to get harder instead of easier. As the mortgage market starts moving into the private market and away from Fannie Mae and Freddie Mac, many believe that tougher lending standards will be created.
As always, if you have real estate questions or want to get pre-approved for a mortgage, call or email me. I am also always happy to sit down with you and go through the whole buying process with you at any time.
