More media splashes this week about the looming sales of the housing market. Well, you have seen it in just about every major news publication. Should buyers stop buying now and wait till the prices drop "even further"?
When investing in the stock market or even the housing market, most buyers use the common emotional reactions: buy when everyone is buying (or the market is HOT). In a Buyer's market (where there is more Buyers than Sellers), and especially with the stories we constantly here that prices will continue to drop for at least xx months, most buyers hold off their plans in hope that prices do continue to drop further.
However, do realize that real estate is a local concept. By that I mean, the effects and results of them are totally dependent in the areas you are interested in purchasing. Even in a slow market, there tend to be pockets of areas within your city that are "hot" or "hotter" than others. Some neighborhoods continue to thrive and increase in price. Hence, working with a local area expert would be essential in guiding you through the right process. Respectfully, it does not quite work with just what the news are saying.
In general, buyers love SALES..... Know that the "higher" the discount, the "more" we as consumers feel that it is time to buy. If you enjoy sales, you should enjoy the "SALES" that is going on in the housing market right now. We do not necessarily say this house is ON SALE or have stickers or banners all over the house (I will admit that would be a little over the top and cheesy), but you can most generally assume that the Sellers do understand that it is harder to sell in this market now and will seriously evaluate the offers that come in. They do know that they are not sure they will get another offer on the table tomorrow. Just like the stock market where the price per share has dropped, as a good investor, you would want to buy then instead of on the "high" time. Why?
This leads to my next point. When you invest (especially when you buy a home), you are investing in your family and your home. You are not buying to speculate the market. While real estate professional do not guarantee that the price you pay for your home will be higher when you are ready to sell it, you should not use this concept to make your purchase. You buy with the long-term mindset. It may be unfortunate that you might need to sell the next six months for whatever reason, but do understand that when you make the buying decision, you are buying for long-term reasons.
At the time of this publication, we are in early September. Sellers are continuing to cut prices - in the Dallas metroplex/ Frisco and surrounding city real estate markets. Buyers can expect to still have a good selection of inventory to choose from whereas in the Winter months, there tend to be less inventory for your selection even though prices may/ could be lower then. It is a chance you take and back to the buying for long-term philosophy, is it worth $2000 or $5000 wait? Who knows how much lower it may be.
Interest rates is still considered historically low. While I have never seen the 15-18% interest rates back in the 80s, long-term fixed rates today remain low. Good mortgage companies with good loan programs continue to stay in business. If you fear the fall of subprime mortgages and you were on the borderline: qualify versus non-qualify status (understand where I am coming from with my next statement, I am not here to burst your American Dream - I am in building people's American Dream of homeownership), you do need to consider your purchase or the amount of your purchase. Can you really afford it?
The difference between 1% rate difference in mortgage for $200,000 (a very common and realistic number for the Dallas metroplex) is approximately $125 per month. If this amount would make or break your monthly home budget, you should not consider this loan amount in the first place. Remember that over time, your salary tend to increase - unfortunately with the rest of the consumer products you need to purchase also.
Buying with the long-term mindset is also a form of FORCED SAVINGS. Understand that your buying psychology, you will continue buy - from clothes, to restaurant food, a boat, a car or an RV. When you purchase real estate, you set a fixed amount of funds aside to make your payment on a house - typically an appreciated asset in the LONG RUN.
There are also lots of financial and emotional benefits to homeownership now, rather than later. Tax benefits can be another topic in itself to discuss...... The physcological, pride and a sense of belonging that are priceless.
So, what should you as buyers now? You decide for yourself. Waiting is an option. It could be a right option for you. But think through it. If it is to save more for a rainy season, great. If it is to speculate that prices may fall even further, know that you as a buyer can control the price you want to pay - regardless of what the news tell you.