Timing The Market



Ask anyone in real estate today and they will tell you unequivocally that we are in a “Buyer’s Market.” The indicators that make that so are high inventory, falling prices, and low interest rates. So why aren’t buyers buying?

A lot of potential buyers are operating from a place of fear, afraid that they might pay too much for their home. If a buyer purchases a home for $200,000 today, and sees the news next month and learns that prices fell another 2%, they feel like they have lost $4,000. So in an effort to “time the market,” buyers become waiters, fence-sitters. This can be a costly approach to finding a new home, and I’ll tell you why.

First, let’s understand that while “what goes up must come down,” so too what goes down must come back up. In the case of real estate, we need to remember that home values will appreciate over time. At the very least inflation will see to that. At the same time, paying your mortgage down builds equity, and the tax benefits of homeownership also can improve your net cash flow.

Second, consider this risk as you wait to try and buy at the bottom of the market; you do not know what interest rates will do while you wait. Right now mortgage rates are at historic lows. I can’t see them going much lower, but I can see them going up. From a financial calculation standpoint, any savings to homeownership costs a 10% drop in home prices provides is completely wiped out by a 1% increase in loan rates. Are you savvy enough, or lucky enough to guess right on your timing?

Finally, we are coming out of a hot real estate market where it was conceivable that you could buy and sell a property every three to five years and make money. Today, your home purchase must be considered a longer term investment, much like your IRA or other investments. Remember, a home is more than just an investment. It is the place where you choose to raise your family, send your kids to school, and make friends and form relationships in the community.

The Lake Norman area home inventory contains some very good deals for buyers. If you’ve been considering buying a home, but have been fearful of making a financial blunder, consider the points I’ve made above.They may help you determine your next steps.


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