The Home Buying Double Whammy
The Home Buying Double Whammy
As we head toward the historically busy Spring Real Estate Season, there is every indication of this being a tough one for home buyers. The state of the market is setting up to work against them, adding a sense of urgency to ACT quickly. There are two critical considerations most people have when shopping for a home- Price and Monthly Costs…and both are working against us.
First, Price… Every real estate agent you talk to (and everyone who has been shopping over the past couple of months) will tell you there is an inventory shortage. There are not enough homes for the quantity of qualified buyers that are out there looking. Properly priced home are embroiled in bidding wars. Newsday recently had an article home the heighten demand coupled with the low supply has pushed home price up 6.6% in the past year. That means a house you could have bout for $500,000 last year is now $530,000. That is a real cost of waiting.
Second, Monthly Costs… While the media has been slow to report this, mortgage rates are UP close to ½% since the beginning of the year…and every indication is that the climb is going to continue. The supposed experts are predicting (because of the strength of the economy, surging stock prices, the tax cut, and what the Fed has publicly stated their intentions to be) that rates will be over 4.5% for the Spring Season and maybe 5% by year end.
A bump in rates means that many of the preapprovals out there today are worthless. My experience is that most salespeople don’t tell clients the bad news until they have to. Instead, they are praying rates drop back down. My friends, hope is not a strategy.
What can you do?:
1- If you are serious about buying, do it. Offer more money to get your deal accepted. Waiting is an ill-advised negotiating ploy today.
2- Consider locking your rate as soon as practical. As an example, the ½% jump on a $400,000 mortgage hiked your payment $112 a month. If you were at your maximum financing, the amount you will be approved for just dropped $378,000.
What you qualify for is shrinking while the price is rising!!! Don’t miss out on what are still great rates! ACT!!!
-la
