Where are the buyers?
Saw a report stating that even with all time low interest rates, this past week was only the 2nd week of increased mortgage application activity over the past 10 weeks. That means that 80% of the time over the past 2.5 months, mortgage applications to purchase a home have decreased. Why? We saw activity increase over the $8000 tax credit. Yes, $8000 is nice, but it is nothing compared to the amount of money that buyers can save RIGHT NOW with these low interest rates over the life of the mortgage.
Example: on a $200,000 loan, with 5.5% interest (which everyone would agree is good), your principal and interest payment is $1,135.58 per month. Not bad. BUT! With rates available today around 4.5%, that same house is now only costing you $1,013.37 per month. That is over $100 per month less on the same house. Over the life of the 30 yr loan, that is a savings of over $36,000. That is much better than a one time $8000.
Yeah, Scott, but I’m not going to live in this home for 30 years. Ok then, lets try to replace the $8000 tax credit with the saving on a per month basis. You only have to live in the home around 6 years to have your $8000 back. Any additional time you live there after that is gravy. Did you know the average length of time for living in a home is 7-10 years? Yep, you just saved more money than the tax credit with these extremely low interest rates available now.
We all know interest rates can change at any time. If you are thinking of buying a home in the near future…..I would recommend that ‘near’ be ‘now’. Interest rates can only go up from here. And guess what else? Prices of homes can only go up as well. Ah, you thought they would stay this way forever.
Lawrence Yun, Chief Economist for National Association of REALTORS, says there are stats out there that show we may be in a housing shortage in 2010 and 2011. Yes, I said SHORTAGE. Simple economics here. Supply goes down, Demand goes up, price goes up. Bam! Reality just kicked in.
"I Am Building a Company, By Design, that Honors Success & Productivity."
For a short video on what is EXIT, go to www.ExitRealty.com and click "Up Close and Personal with EXIT"
\nBy: on July 21st, 2010 Category: Uncategorized