Is this the best time ever to buy real estate? A Google search on the topic revealed a page of articles from experts who state unequivocally that it is. Should buyers wait for the market to hit bottom or could rising interest rates cancel out anticipated savings? This recap is a fresh take on the real estate market with a positive perspective.
- “The Market is Stabilizing”- Delinquency rates are down from 10 percent in the second quarter of 2010 to 8.5 percent for second quarter 2011. Delinquencies among fixed rate loans dropped to 5 percent in 2011—this is near the normal range.
- “Most Sectors are Experiencing Real Home Price Growth”- Both the negative equity issue and the challenge of declining home prices are actually concentrated in a few key states. David H. Stevens, the president and CEO of the Mortgage Bankers Association in Washington, D.C., notes that “24 percent of the foreclosure activity is concentrated in Florida. Fifty percent of the foreclosure activity is in five key states.” He suggests that those who quote declines in the average price of homes nationally are using dangerous data, since each market is different.
- “Price Declines are Not a National Problem” – Stevens observes that “If you remove the foreclosure properties from the equation, non-distressed properties have actually experienced an increase in prices.”
- The Best Time Ever to Buy”- For those waiting for the market to hit bottom before purchasing, Stevens provides a reality check scenario. Buyer A plans to finance a home purchase with a $200,000 mortgage. He waits until the market price has dropped an additional 5% because he wants to buy at the bottom of the market. Buyer A saves $10,000 on the sales price of the house. During the waiting period interest rates increase from 4% to 6%, adding an additional $87,937 in interest to the cost of owning the home. Subtract the $10k savings on sales price and the delay will cost the Buyer A an additional $77,937 in interest payments. Many are waiting to save a small percentage of the price of the home when rising interest rates could cost them much more.
- “If There Were Ever A Time To Buy” – Stevens’ bottom line assessment is clear: “Real estate is now at bargain levels that we will never see again in our lifetimes. If there were ever a time to buy a home, that time is now.”
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Source: This is a recap of a recent interview of David Stevens, former head of FHA and the current President and CEO of the Mortgage Bankers Association conducted by Bernice L. Ross, Master Certified Coach, Ph. D, and Author of Real Estate Dough, Your Recipe for Real Estate Success.