Just as in the stock market, one is tempted to try to make a real estate move at “just the right time”. That would mean selling high, buying low, getting the lowest interest rate on the mortgage loan you need and, of course, having all this happen when the time is right for you!
Of all these variables, the loan is the easy part. Since about 1984, mortgage loan financing has been pretty reasonable—that’s when the rates dropped under 10% for good. If that doesn’t sound very appealing, consider that, at the time, it felt fantastic after 3 years of mortgage rates that ranged from 12 to 18%! In 1982, the majority of homes in the Greater Kalamazoo market sold on land contract (with the seller acting as the bank) at 11% interest—the highest rate allowed by Michigan law—and every buyer felt lucky to get that affordable a rate!
You can now get a 30 year fixed rate under 6%, with 15 year rates approaching 5%. This is affordable by any measure of the past 25 years. And don’t fret over the media headlines from the past couple months. Money is available. The only thing that has really changed in the home financing arena recently is that banks are again acting as prudent banks should: checking credit, verifying income and deposits.
The challenging part is selling high and buying low. While there are things you can do to nudge things in that direction (more on this later), logic tells you that if it is a seller’s market when you are selling, it will be a seller’s market when you turn around to purchase as well. In a way, that is good news. Especially when you are making a local move, it can be a relief to know that after selling your home at what feels to be a rock bottom price, you will be able to go out and find a bargain yourself. Conversely, when you sell at a premium price, chances are that you will pay a premium on the other end. When you stop and think about it, the difference between the old home and the new one is less in a buyer’s market. That makes NOW a very good time, financially, to make a move. It may take more time to sell, but there will be lots of choices and great prices when it is time to buy.
All of this hinges, of course, on the timing that works best for you. If you’re really not ready to make the move (it is a lot of work!), then none of this matters. If you ARE ready, we encourage you to get on the market in late winter before inventories swell (June—August) in order to face less competition and still have a good number of buyers. For tips on how to compete well in today’s very crowded market, read our previous blog entries (October 17 & December 3) or give us a call.
www.jaredarnold.com
