Home Prices and Interest Rates, Playing the Waiting Game

I have recently had multiple conversations with prospective buyers.  In these conversations the same concern seems to pop up continually, to paraphrase, “I just want to wait until prices drop a little further and I can still get a low interest rate”.  This line of reasoning concerns me for two reasons.  First, the two factors mentioned here, home prices and interest rates, do not move in tandem.  To that end, we have not seen a major rebound in housing prices, but according to Realty Times’ David Reed, “mortgage interest rates shot up this past week at the fastest pace in 20 years…”  Second, there is no moment of critical mass where home prices and interest rates will be at their absolute lowest and then begin to rebound together.  If this moment existed everyone would take advantage, it is simply not that easy. 

So how do you make a decision?  Look at a number of variables and act when more are in your favor than against you. The following speak to current conditions:

1. Extensive inventory on the market (Sellers competing for buyers who are willing and able)
2. Interest rates are some of the lowest in the last 40 years (Money is cheap to borrow)
3. New construction is at a 17 year low (Inventory will start to diminish allowing prices to rebound)
4. Personal Preference and Judgment (Would you be happier in a home you own?)

Click the link below for the full article:
http://realtytimes.com/rtpages/20080222_realtyviewpoint.htm

 Best,

JLC