Yes, there is a lot of negative news out there in the world today. With the daily swings in
the stock market, unemployment is way up, the continuing wars overseas, countries on
the verge of bankruptcy, and businesses moving out of the U.S.A. to save precious tax
dollars. Who would want to buy a house during these questionable economic times?
Why should anyone want to take the chance?
First reason: The obvious, prices are way down. In our neighborhood the values are
down 25-30% from where they were five years ago.
Second reason: Interest rates are at crazy low rates. Right now conforming 30 year fixed
rates are at 4.38%. This is a real biggy that a lot of people are missing.
If you are buying a house today for $800,000 and you are getting a loan for
$625,000. Your monthly payments would be a little over $3,100 a month.
In 1992 your payments on that same $625,000 loan would have been a little over $5,000
a month because interest rates where around 9%.
In 2001, just 10 years ago your payments on that same $625,000 would have been a little
over $4,272 a month because interest rates where around 7.25%
If you bought the same house in 2006 you would have paid around $1,100,000 and your
loan amount would have been around $800,000 with an interest rate around 6.88%. Your
payment would have been around $5,700 a month, almost double.
Today’s payments are incredible when you look at where interest rates were and where
they are today. Not only are the payments lower but the price that you are buying your
house for is so much lower today than in the past. I am not saying that prices are at the
bottom because I have no idea of when we are going to hit rock bottom. By the time
anyone knows that it is the bottom it is months and months after prices have started to
rise. I do know that interest rates combined with low prices equals a good time to be a
buyer, especially if you are a buyer that is looking to stay put for awhile.
When you look at these crazy stock market swings, real estate is a lot more stable,
therefore a more attractive investment. I have seen days in the stock market where the
value of a stock or a segment goes down dramatically in a very short time. This decline
in market value of our homes has taken five years to reach the levels that we are at today.
If you are a buyer on the fence, find a good house, and lock in a great rate and start
enjoying your home today.
The interest rates that I quoted are meant to be used as examples. Please verify you own
rates before you purchase a property.
Any questions or comments please contact Matt Epstein@Prudential California Realty
@Somatt@aol.com . Matt Epstein is considered the expert for real estate sales in the
South/East San Fernando Valley.
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