Buyers shouldn’t wait on falling prices

We keep hearing here in Sarasota that a particular buyer wants to wait because they are convinced the market has further to fall.  Well if the law of supply and demand holds true that MAY not really be the case for OUR area. MLS inventory levels are substantially lower now than they were six months ago. But the REALLY interesting this I found in the article reprinted below is the statistic that if interest rates go up just one point (and all indications are that we ARE at a market LOW for rates) your payment will be the SAME even if the acquisition price dropped by TEN PERCENT from today's pricing.

If you also factored in the current tax advantage for first time homebuyers as an example, that will expire in just a few months sitting on the fence or trying to "time the market" could in fact be a very bad move!

From Florida Association of Realtors:

NEW YORK – Aug. 5, 2009 – Fear of overpaying for property is common these days, especially in places where prices continue to be unstable. If you encounter potential buyers afraid to commit based on a fear that they’ll pay too much, point out these factors:

• Waiting for the right time can be expensive. Some buyers would have more equity today, despite falling prices, if they had bought when they first considered it instead of continuing to pay rent.
• Financing is fickle. Some people who were highly qualified last year can’t find financing this year because the credit market has tightened or their personal financial situation now makes them an undesirable borrower.
• Interest rates are headed up. If prices decline by another 10 percent but interest rates increase by 1 percentage point, the monthly payment will be the same.

Source: The Wall Street Journal, Douglas Heddings (07/27/2009)

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- Mike W.