But Really, Is It Time to Buy?

Is it really time to buy or is this “Realtor Speak” to drum up business? It is very easy to ignore the advice to “Buy Now!” because it comes from Realtors and lenders who will benefit from people who buy. But does the fact that someone will benefit from you making a purchase, mean this is bad advice? Does it mean you should not make the purchase? Should you wait until the market improves? When will that be?

We all are bombarded daily with reports on the stock market, the economy, the job market and the state of the real estate market. Often the information we receive is conflicting. The housing market is still falling! The housing market has stabilized! The housing market is improving! Well, which is it?! Often, all of these claims are correct! It has been said many, many times that you cannot make claims concerning a national real estate market. This is so true. Real Estate is a very local market and what happens here on Hilton Head Island can not be compared to what happens in California, Florida or even in other parts of South Carolina.

I recently attended a state conference where I was privileged to hear a speaker named Steve Harney. Mr. Harney is one of those wonderful people who keep up with all the charts, market analysis, records and other minutia that most people are not able to able to find, much less make sense of! Here are a few of his thoughts on the subject of buying now.

First, consider the interest rates. We are all aware that they are as low as they have been in about forty years. But will they stay this low and if so, for how long? Mr. Harney believes that the current rates cannot remain much longer. He pulled out his charts and graphs to show us what has happened in the last forty years to interest rates. This is what he said over and over and made everyone repeat it with him, “When interest rates rise, they will rise quickly and dramatically!” His assessment is that interest rates will rise at least 2% and possibly more.

Can anyone remember when interest rates were 18% and more? I can! I was in college and working at a savings and loan. The saving and loan had to let almost all their mortgage and appraisal people go due to lack of business. People simply could not afford to buy anything!

To put this in perspective, if you want to borrow $300,000.00 for a new home, your thirty year principle and interest payment on this loan would be 1798.65 per month at 6%. It would be $2201.29 per month at 8%. This means that if you are sitting on the fence waiting to make your purchase, and interest rates go up only 2%, the same home will cost you almost $5000.00 per year more to own than if you purchase while the rates are this low. If you stay in this home only five years, you are now paying $25,000.00 more. AND, you are paying it to the bank, not the home seller! You are not getting anything more for your money, you are just paying more. By the way, interest rates as of today are being quoted as 4.875 which makes this payment $1587.62! You can do this math on this one!

See next week’s blog for more reasons to buy now! To check out the real estate market on Hilton Head Island, check out my website at www.KatGardner.com. I do not require any personal information in order to view any information so have a look and enjoy! Please contact me with any questions at Kat@KatGArdner.com or 843-422-3381.