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RSS FeedLower Interest Rates, Cooler Market = Buyer Opportunity!! |
Sep. 3, 2006
Categorized in: Current Exhibits
Tagged with: buyer opportunity, interest rates
Contrary to most people’s expectations, interest rates have been slowly drifting lower since the Fed’s last meeting in which they left the rates where they were instead of raising them as they had been doing for the past 2 years. During the past week fixed rate 30 year mortgages averaged 6.44, down from last week’s 6.88. By comparison, the rate one year ago was 5.71 (for full details go to “Rates Continue to Drift Lower at http://nationalrealtynews.com .)
For buyers who have been waiting for the market to cool down, this may present a golden window of opportunity. While the rates average 0.73% higher than last year, the 6.44 is still very low by historic standards. When I purchased my first home in 1976, I was elated to get a 7.5% mortgage. Rates rose steadily after that, and eventually went as high as 16-19% for a 30 year fixed rate first mortgage in the early 1980’s. By the time I purchased another home in 1990, rates had dropped to as low as 12%. Again, I thought that was quite a deal. I never imagined that rates would drop below 10% again in my lifetime! Boy, was I ever wrong!
For the past few years buyers have been able to take advantage of some of the lowest interest rates in history. The thing to remember is that the rates are still in that category. There are many reasons to believe that this will not last forever. In the meantime, the tide has turned in the buyer’s favor in many markets. This is the perfect storm for the patient buyer…..a combination of still historically low interest rates AND motivated sellers!!
When I purchased my current home in 1990, I knew the market was slowing and prices were declining. Rates were declining too. But I also knew that the real estate market goes in cycles, and I was confident that, even if my house went down in value (which it did,) it would also go up in value (which it did) when the next cycle hit. I also knew that a slow market is the best market to buy into… lower prices, less competition, more choice. If I had waited until the market got hot again, I may not even be able to buy the home I have now. I certainly couldn’t buy it for the price I paid for it!!
At some point buyers who sincerely want to buy their first home (or move up to a bigger home) have to commit and take action. Now may be the time!
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