Buy Now: It May Be Later Than You Think
Home buyers are reluctant to buy right now. It's easy to understand why. Pick up any newspaper, tune in the TV news, read any financial magazine and all you hear about is the real estate "correction". Consequently, homebuyers are nervous about committing to the purchase of a new home or investment property. Prices could -- and I stress the word could -- go lower and buyers fear they would have paid too much and be unable to recoup the price difference any time soon.
It's true, in the short run your real estate investment might become de-valued. But unless you are planning to sell the property quickly -- flipping is the common term -- you should look at your real estate purchase as a long-term financial investment. If you look at it that way, the short term ups-n-downs of the marketplace are virtually meaningless.
Let's take a brief look at some key factors that might have a bearing on your purchase decision. These factors may change your mind about putting off your purchase and will give you some good ideas as to why now may be a good time to buy.
1. Low Mortgage Rates. Mortgage interest rates seem to be holding in the neighborhood of 6.5% for a fixed rate 30-year mortgage. Historically, that is cheap money! Sure, it is not the 3.5% rates we saw a year to two ago, but if you're holding your breath for those rates to return you are likely going to suffocate. Take advantage of these historically low rates right now before they go away forever.
2. You're Already In A Buyer's Market. There is no doubt that it's a buyer's market today. At the end of September, 2006 in Pinellas County, Florida, the local Multiple Listing Service had a total of 16,202 single family homes, townhomes and condominiums listed for sale but only 1,028 properties were sold that month. As a buyer, you now have a huge selection of property and very little competition since so many buyers are sitting on the sidelines waiting for prices to suddenly drop. If you wait for newspaper writers to pen stories saying the real estate market has bottomed-out, all those people who have put off buying will suddenly jump back into the market. This will increase competition. Increased competition will reduce your selection and, more importantly, drive prices higher. It will become a miniature version of what we had in 2002-2004 with rising prices. Act now while the selection is at its best and while nervous sellers will negotiate lower than expected selling prices, discounts and other consessions.
3. Sellers Are Getting Impatient. Some homes have been on the market for many, many months. Some sellers are desparate. Some are in financial trouble and must sell to avoid foreclosure. Now's the time to float them an offer that's on the low side of acceptable but not insulting. You might be pleasantly surprised at what happens. After all, money talks.
4. The Market May Have Already Bottomed. Asking prices may be as low as they are going to get. How low do you expect sellers to go? Frankly, my crystal ball is a little cloudy on that answer. Even in markets where heavy speculation drove prices way, way up, the experts say prices will likely only adjust a few points. Do you think prices are going to fall back to where they were in 1999 or 2000? Not likely. Take Naples, Florida, which is one of the most over-priced real estate markets in America; prices are expected to drop by only 18% there. In Tampa Bay where there were plenty of speculators driving up values, prices may drop by only 7% to 10% on average from where they peaked last year. In fact, asking prices may already have come down as far as they are going to go. If you keep waiting, you may actually miss out on the bargains. Now is the time to start making offers.
5. Get Adjusted To The "New Normal". We all need to come to grips with the fact that the real estate market we see today is pretty much the real estate market we'll see for many years to come. We need to get used to it. Home ownership has become expensive and is likely going to stay that way. It's the "new normal" -- high prices, high taxes, high insurance rates, and fluctuating mortgage rates. We all need to learn to live with it, and to learn to live within our means in spite of it.
Waiting for prices to come down reminds me of a cartoon I saw some years ago. It was of an old, old, old man looking at a house with a "for sale" sign in the yard. The caption said something to the effect that this is what happens to young men who wait for real estate prices to come down. Think about that one for a moment.
If you're a buyer, here's the deal today ... mortgage rates are low, but may go up anytime ... selection is fantastic because inventories are high ... you control the negotiation because you have money and sellers are getting nervous ... competition is low ... sellers are looking for offers. It does not take a genius to see that this is the time to buy.
If you wait, here's the danger ... mortgage rates may creep upward ... competition from other buyers may drive prices upward ... your selection will be gradually reduced ... sellers may see market improvement and not be willing to negotiate even lower prices.
Nobody wants to lose money on real estate. The odd thing is that if you're waiting for prices to come down, you may end up paying more. Buying now may be the smart move.
If you want more information about real estate in Tampa Bay, please visit my website at www.thestpeterealestatesite.com.
It's true, in the short run your real estate investment might become de-valued. But unless you are planning to sell the property quickly -- flipping is the common term -- you should look at your real estate purchase as a long-term financial investment. If you look at it that way, the short term ups-n-downs of the marketplace are virtually meaningless.
Let's take a brief look at some key factors that might have a bearing on your purchase decision. These factors may change your mind about putting off your purchase and will give you some good ideas as to why now may be a good time to buy.
1. Low Mortgage Rates. Mortgage interest rates seem to be holding in the neighborhood of 6.5% for a fixed rate 30-year mortgage. Historically, that is cheap money! Sure, it is not the 3.5% rates we saw a year to two ago, but if you're holding your breath for those rates to return you are likely going to suffocate. Take advantage of these historically low rates right now before they go away forever.
2. You're Already In A Buyer's Market. There is no doubt that it's a buyer's market today. At the end of September, 2006 in Pinellas County, Florida, the local Multiple Listing Service had a total of 16,202 single family homes, townhomes and condominiums listed for sale but only 1,028 properties were sold that month. As a buyer, you now have a huge selection of property and very little competition since so many buyers are sitting on the sidelines waiting for prices to suddenly drop. If you wait for newspaper writers to pen stories saying the real estate market has bottomed-out, all those people who have put off buying will suddenly jump back into the market. This will increase competition. Increased competition will reduce your selection and, more importantly, drive prices higher. It will become a miniature version of what we had in 2002-2004 with rising prices. Act now while the selection is at its best and while nervous sellers will negotiate lower than expected selling prices, discounts and other consessions.
3. Sellers Are Getting Impatient. Some homes have been on the market for many, many months. Some sellers are desparate. Some are in financial trouble and must sell to avoid foreclosure. Now's the time to float them an offer that's on the low side of acceptable but not insulting. You might be pleasantly surprised at what happens. After all, money talks.
4. The Market May Have Already Bottomed. Asking prices may be as low as they are going to get. How low do you expect sellers to go? Frankly, my crystal ball is a little cloudy on that answer. Even in markets where heavy speculation drove prices way, way up, the experts say prices will likely only adjust a few points. Do you think prices are going to fall back to where they were in 1999 or 2000? Not likely. Take Naples, Florida, which is one of the most over-priced real estate markets in America; prices are expected to drop by only 18% there. In Tampa Bay where there were plenty of speculators driving up values, prices may drop by only 7% to 10% on average from where they peaked last year. In fact, asking prices may already have come down as far as they are going to go. If you keep waiting, you may actually miss out on the bargains. Now is the time to start making offers.
5. Get Adjusted To The "New Normal". We all need to come to grips with the fact that the real estate market we see today is pretty much the real estate market we'll see for many years to come. We need to get used to it. Home ownership has become expensive and is likely going to stay that way. It's the "new normal" -- high prices, high taxes, high insurance rates, and fluctuating mortgage rates. We all need to learn to live with it, and to learn to live within our means in spite of it.
Waiting for prices to come down reminds me of a cartoon I saw some years ago. It was of an old, old, old man looking at a house with a "for sale" sign in the yard. The caption said something to the effect that this is what happens to young men who wait for real estate prices to come down. Think about that one for a moment.
If you're a buyer, here's the deal today ... mortgage rates are low, but may go up anytime ... selection is fantastic because inventories are high ... you control the negotiation because you have money and sellers are getting nervous ... competition is low ... sellers are looking for offers. It does not take a genius to see that this is the time to buy.
If you wait, here's the danger ... mortgage rates may creep upward ... competition from other buyers may drive prices upward ... your selection will be gradually reduced ... sellers may see market improvement and not be willing to negotiate even lower prices.
Nobody wants to lose money on real estate. The odd thing is that if you're waiting for prices to come down, you may end up paying more. Buying now may be the smart move.
If you want more information about real estate in Tampa Bay, please visit my website at www.thestpeterealestatesite.com.
-30-
posted by Terry Ward at 6:44 AM
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