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

Buyers Benefit as Developers See Difficult Time Ahead

 Developers will face quite the quandary in 2008.  While demand is slowly rising, sales of new downtown condominiums and townhomes fell 36% last year.  6,000 new units will become ready for occupancy in 2008 and many developers will not be able to bare the financial burden if they are unable to move these units.  Case in point, the developer of Ashton Lofts on Ashland and Fullerton is facing foreclosure due to their inability to repay the bank for construction loans.  While this will not effect individuals who have purchased there, it will certainly alter the asking price for the remaining units.

Opportunity for buyers reigns supreme as developers offer incentive laden programs to entice the public into buying.  I have even seen developers offer 6 months of assessments, mortgage payments, and help with closing costs just to close out their developments.  Call me if you have any questions or are interested in these sort of opportunities.

View the article below for more detailed information:

http://chicagorealestatedaily.com/cgi-bin/news.pl?id=28206

Best,

JLC

Congressional Stimulus Plan to Aid Housing Market

With the upcoming presidential election there are quite a few policy issues to focus on.  However, the question of our economy and what’s to be done has loomed largest recently.  Along that front, congress’s economic stimulus plan may have a drastic effect on the current housing market.  If all goes as currently planned, the package will increase the limits on loan sizes that can be purchased by Fannie mae, Freddie mac, and FHA. “Under the stimulus plan, the maximum mortgages for all three programs will jump to 125 percent of a local area’s median house price-with a top limit just under $730,000.” – www.realtytimes.com

It is projected that this stimulus could result in the purchase of a quarter of a million homes in just a twelve month period. 

The link below will connect you to the entire article:
http://realtytimes.com/rtpages/20080201_washingtonreport.htm

Best,

JLC