Many of our current clients are asking us when will be the best time to purchase a new Parkland home. Many buyers are still sitting on the fence waiting for home prices to hit bottom. Buyers want to have some assurance that they are purchasing at the best possible price. The Parkland Parrot Real Estate Team agrees that home prices will continue to fall in 2011. But, we disagree that waiting for prices to hit rock bottom is the best financial decision for buyers sitting on the sidelines.
It is imperative that any home buyer first speak with a mortgage professional. Buyers should be more concerned about cost than housing prices. Remember, you are not just buying a property, but paying a monthly mortgage payment. As a result, cost needs to be on all buyers top list of concerns! Your mortgage professional will tell you that the cost of a house is based not only on the price of the home, but on the current interest rates.
According to the National Association of Realtors (NAR), home sales increased by 15.4% in the 4th quarter of 2010 over the 3rd quarter of 2010. NAR also highlighted in their research report that prices remained stable during 2010.
On-the-fence buyers probably feel good that they delayed their home purchase in 2010, as home prices certainly did not increase. But, recent news shows that monthly payments have increased and will continue to increase in the coming months.
Freddie Mac recently released its Primary Mortgage Survey showing that current interest rates on 30 year mortgages was at 5.05%. Vice president and chief economist for Freddie Mac, Frank Nothaft, stated, “Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”
As a result, interest rates have increased dramatically over the past 90 days and will continue to steadily increase this year. What does this mean for potential Parkland home buyers looking to pull the trigger on a purchase in 2011?
Let’s look at the chart below for emphasis:
By not purchasing a home in the last 90 days, a purchaser lost:
Even if prices fall another 10% by the end of 2011, your monthly mortgage payment will increase if interest rates increase by more than 1% this year. We are telling our clients not to worry as much as to where prices may go and instead be more concerned where mortgage interest rates will climb to later this year. You do the math!
We know the numbers, we analyze the market, our clients make better decisions. If you are interested in buying or selling a home in Parkland or South Florida and are looking for experienced local Realtors, please do not hesitate to contact the Squawk at 954-609-0591 or send us a message here.
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