Home Buyers Don’t Miss The Boat!
That is right yet another blog about why you should buy a home now if you are even considering it. You need to understand the actual facts that are creating a “perfect storm” situation for buying a home.
First of all interest rates are at a historically low level. Just for an actual example I had a buyer (a young woman, a nurse) qualify and lock in her interest rate to buy a home at the amazingly low interest rate of 3.75%! I am sorry but my jaw dropped when I saw that email that we got her locked in for her mortgage at 3.75% FIXED RATE. That is right this is not an adjustable rate (which they will give you a low teaser rate for the first few years). The interest rates have not been this low in well over a quarter of a century. So if you think you are going to ride this out and then buy later you will most likely be paying a much higher interest rate. As I was speaking with a Vice President at a local bank last week he told me that I should get rid of any variable rate debt. In other words any debt that the interest rate is not fixed. They are saying that by 2013 the interest rates will be in the double digits which is over 10%. That means even if the market stays depressed you will be paying much more for that home over the course of your time in that home.
Secondly as we have all seen the housing market is still slightly depressed in the pricing sector. HOWEVER, remember that real estate is an EXTREMELY regional business. For instance our market here in Greensboro, NC is much better then say the market in Las Vegas, NV. Here in North Carolina most of our markets did not take such a bad hit as many of the nationally reported markets that the national news media love to report on. In relation to the housing market there is one factor that is rapidly changing the landscape. The inventory of homes for sale is dropping. It is very surprising how many homebuyers are flooding the market. I have spoken with agents & brokers all over from in our own market here in the Triad of North Carolina (Greensboro, High Point, Winston-Salem) and we are all surprised at how busy we are with so many buyers emerging over a short period of time. I have even hired extra agents to handle the influx of buyers.
Well all of these buyers are buying up the existing inventory of homes available for sale. Well for those students of economics (Thank you Dr. Bebensee my Economics Professor) this is effecting the Supply and Demand Curve. To put it simply as the supply goes down the demand will go up! So as the demand rises so will the prices.
In real estate how we determine when our market starts to turn is when our inventory levels are at a 6 month supply. Over a year ago we had over 15 months of inventory on hand. How we arrive at this figures is simply taking the number of homes sold in a given thirty day period and divide it into the number of homes presently for sale. Just to satisfy your curiosity we have less then 9.8 months of inventory. So just remember as that number continues to decrease the demand/price of homes will be affected.
The moral is: This “Perfect Storm” for homebuyers is coming to an end so don’t the boat!