‘Why not now?’

toon_126_0Have had a couple conversations of late with some friends/clients who are currently renting the home they live in.  In both cases they are paying between 1600-1800/month. I asked,  “Why not buy right now? You can get a nice home with a sizably lower monthly mortgage.”

One couple said they really like the house they are renting and would like to buy it, but the owner wants too much.  “So we’re content with renting right now.”

The other friend said, “Yeah I would like to buy,  but it just seems like a lot of work and I can afford the rental, so there is no need to uproot the family right now.”

happy-quotes-1452Hey, I hear ya. Nothing wrong with liking where you live. And certainly there’s nothing wrong with wanting too keep things consistent for the fam.  Have nothing but respect for that. However (you knew that was coming), lets make sure everyone understands the time we are living in.  Interest rates are at their lowest point ever.  They have been incredibly low for 7 or so years now.  It’s been great. Low interest rates have helped our great country rally back to economic stability and dare I say prosperity?  And most of the housing values have returned, particularly under the 500K level.

cumulative_inflationNow I’m not an economist, but I understand some basic principals. Because we have had such low interest rates, we have avoided inflation.  Once the Fed starts to raise the rate, isn’t it likely that inflation will begin to kick in?  Hasn’t inflation been about as historically consistent as the rising and setting of the sun?  With that, one of the best ways to make money on your next home is to be holding real estate when the inflation kicks.

0fc3aa2d02beaca4d03301e4c59e3c1061a399a142de1efb040fc087a82fd01bThink back to the 70’s. My folks bought the house we grew up in in 1972 for 25K. Sold it in 92 for 170K.  Now the hitch is that in the late 70’s they were paying as much as 14% on their loan.  Good thing it was 14% on only the 15K they owed and not the value it had inflated too.  Because by 78-79 that house was worth closer 80K. By then the combination of high interest rates and higher values made it difficult for first-time home buyers to afford a house.

3_turdlesWhat I’m saying is, be careful.  You might want to buy in a couple of years.  But the interest rate is likely going to be closer to 6%, maybe higher, certainly not the 3.5% currently being offered. And you might be paying 400K for a house that was 300K just a  year or two before.   Now I’m not a mathematician either, but one would be looking at an interest payment of 2000/month on 6% of 400K. In contrast, at 3.5% of 300K, one would be looking at an interest payment of only 875/month.

What I am is a Realtor who would like to help you save money, find a great home and make a good investment.  Sound good?

Let’s roll!





One thought on “‘Why not now?’

  1. I wonder if a lot of people are just a little numb – from seeing all the instability in the housing market, job market. It seems that after a while they might like to stop ‘floating’
    and savor nesting.


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