Is it time to sell?
I wrote this post in late 2008:
If you are seriously thinking of selling your house, NOW is the time to get serious. So you think we are at the bottom of the market? Here are a few points to consider:
• Single Family Sales units in North Central MA are declining at a Faster rate (more than 2 times) than the same period last year.
• Single Family average Sale Prices are declining at a Greater rate than the same period last year.
• Lending standards are getting increasingly more difficult – i.e. harder to get a loan.
• Job losses are only Now starting to come into play – and there are more coming.
• The economy is eroding before our eyes.
• The foreclosure rate is increasing
• Currently we are 2-3 years before the ‘Bulk’ of the Adjustable Rate Mortgages reset (Including the Option Arms – what’s an Option Arm? Look for another post soon).
• I can go on…
Looking at these facts, is there any reason why you would think that prices are going to go up?OK, so you are a buyer. Why Buy now? Well, 30 year Fixed Rate Mortgages (yes, FIXED – not Blend loans, Option Arms, NINJA loans, etc.) are still at 40 year lows BUT prices have been beaten up over the past 3 or so years. We are seeing prices back to levels we saw in 2003 +/- but Mortgage rates are just about as low as back then – thus setting the stage for some great affordability.
If you have a secure job, this is a great opportunity. Yes, prices may fall more, however Interest rates are almost sure to go up due (to the economy, the low value of the dollar, imminent recession, etc). So remember, small changes in the Interest rate can equate to large increases in the payment.
When I had originally written this in October of 2008, I had been reading and hearing from many sources that the bottom had been reached, and the market was going to turn around. I was NOT convinced of this, not on a National level, and certainly not locally.
Today, the advice I gave in my post holds true, I think. We have not seen the bottom yet. There is more activity- and that is good. But consider this:
Many sellers are holding back, waiting for the market to change. As soon as there is any indication of this, many will list. This added inventory will keep prices flat.
If interest rates go up even a half point from the average 30 year rate of just under 5%, this will limit the buyer pool further. A home that costs $200,000 with a monthly payment of $1073.64 under that scenario would end up costing $1135.58 at 5.5%.- a significant increase.
Questions? Call me at 978-537-6401, ext.24.
