ARE YOU TIMING THE MARKET TO BUY OR SELL?

Everyone wants to buy low and sell high.  Buyers are still sitting on the fence even though this is the lowest the interest rates have been in 50 years and the housing values are down from recent years. 

Sellers tell us they want to wait until the market improves until they sell their house and Buyers say I want to wait to see if the interest rates come down some more and the value of homes drop further.   

This is what I tell Sellers – Your house value may go up over the next couple of years, but when you sell and turn around and buy another house the value of THAT house has gone up too. 

This is what I tell Buyers – This is THE best time to buy!  Values are down and the interest rates are historically low.  Timing the market is risky, because I would rather see a Buyer buy one day too early with their interest rate rather than buy one day too late when the rates are rising again.

On a loan for around $200,000 – let’s compare the impact of interest rates:

FACT:  Each ½ point increase in your interest rate gives you $12,500 less in purchasing power.

FACT:  Each 1 point increase in your interest rate gives you $25,000 less in purchasing power.

FACT:  Each 2 point increase in your interest rate gives you $50,000 less in purchasing power.

If you put down 20% with $1,500 property tax, and $450 for homeowner’s insurance for a 30 year fixed loan:

$150,000 sales price, at 6.5% interest, your payment is $920.98

$162,500 sales price, at 5.5% interest, your payment is $900.63

$175,000 sales price, at 5% interest, your payment is $914.05

$200,000 sales price, at 4.5% interest, your payment is $973.20

The payments are similar, but the home you can afford to buy at 6.5% is $50,000 less than the one you can buy at 4.5%.  AND that $200,000 house value is down by 20 to even 30 percent.  NOW is the best time to buy AND sell.