To buy or not to buy? That seems to be the question lately. If you're asking me then I am telling you to BUY! Trust me, you will thank me later (just like my other buyers who listened to me earlier this year). What a year we’ve had in 2016 for the Real Estate industry. It started off with a bang when buyers were coming from all angles to take advantage of the low interest rates. Homes were not sitting on the market too long although the ones that were over priced obviously did sit on the market longer than usual. Sellers were demanding slightly higher prices and were getting it, although buyers that were willing to pay those prices, were expecting to have a move in ready home. Summer continued to be strong but slowed down towards the end. That’s simply because it was a Presidential Election Year, which always has a substantial impact on the real estate market because it creates uncertainty. Buyers sat on the fence and sellers that were contemplating putting their home on the market were hesitant and wanted to wait until after the elections or New Year.
With 2016 coming to a close, and Trump about to take office, interest rates have gone up a bit and the Real Estate Market is ending on a strong note. Now I'm not a fortune teller, but I believe 2017 should be even better, particularly the 1st and 2nd quarters. That’s because interest rates are projected to continue to creep up and the Feds have been talking about raising rates again. So if you are a buyer, you should get off that fence and start looking into a mortgage pre-approval soon. Why you ask? Well let me give you a highly likely scenario:
You are purchasing a home and the loan amount is $500,000 at 4% interest rate. Your principal and interest alone is approximately $2,387 right? If it is increased only .5% from 4% to 4.5%, your principal and interest will jump to approximately $2,533. That’s a difference of $146 PER MONTH! You would need to get a $30,000 price reduction in order to get the payment back down to $2,387. I highly doubt any home owner will drop the price that much just because you chose to wait it out. And I’m sure you can think of a lot of things you can do with $146 extra in your pocket each month… (Like maybe taking me out to lunch lol.)
Although I am never pushy when it comes to advising my customers and clients what to do, I would advise ANYONE to buy as soon as they can in a market like this. The reality is we have been spoiled for the past 8 years or so with interest rates being so low. Yes, home prices have come up a bit but they are still very affordable compared to the early to mid 2000’s when home prices were high and rates were around 6%. We are now swinging back to a “normal” market and 2017 should be pretty interesting. Remember that rising rates also means a strengthening economy so we can’t be too upset about that.
The Holiday season is over and Winter is upon us which also means not as many buyers (less competition). Serious and smart buyers should now take advantage and focus on purchasing a home in order to not compete with too many buyers. Supply is on the low side right now which can typically drive up the prices of homes, but prices seem to be pretty stable this time of the year. There are some great homes out there so get out and buy. If you don't find the perfect home soon don't worry because spring is just around the corner. Spring into the summer tends to bring the most inventory on the market as well as draw more buyers. Be careful though because some homes that come on the market at that time are fueled by sellers who are trying to take advantage of the influx of buyers and rake in top dollar. My advice to all the sellers is to please please please trust the pros and price your home accordingly, regardless of the season or personal circumstance. You are employing us as your realtor and real estate professionals so please take our advice when it comes to your home price. Also don't take offense to any suggestions we might have to get your home in show condition. It’s for your own benefit and will ultimately impact your bottom end for the better.
All in all, it was a good 2016 and should be an even better 2017. Buyers, you should meet with a mortgage rep to get a pre-approval asap. A solid and prepared buyer is valuable to a seller so they will be more willing to negotiate with you in order to have a quick smooth deal. Sellers should take the advice of the pros and be open to suggestions and negotiations. I advise both buyers and sellers to be smart, act quick, and don't play senseless games. Let’s have a fabulous 2017 folks!