Here’s a cartoon that says it all:
We’ve been talking about it here for a few months now and even though a few months ago it was primarily optimism on our part speaking now it’s the majority of economists and media outlets speaking, about: Hitting bottom, recovery, the end of the recession. If you haven’t taken the hints by now you’ve probably missed the boat because one of the signs that the “best time to buy” boat is sailing is interest rates going up and guess what, they’re climbing – FAST. Been hearing of 4.5% rates? They’re gone now and are not likely to return anytime soon, from 4.98% last week (which by the way was up from the week before that), to over 5% now (according to bankrate.com). Home prices? Yup, those are climbing again too and housing inventory is decreasing which shows we are moving to a more stable market, take a look at our RMLS Market Action Report commentary page on our main site to get those reports.
It’s easy to think that when the Realtor you look to for real estate advice says they think we’ve hit bottom, now is the time to buy that it may just be that Realtor wants you to buy so they can get another paycheck, problem is we don’t work that way. We frequently tell people NOT to buy or NOT to sell if we don’t think it’s in their best interest to do so in their situation; we’ve converted a lot of home owners into landlords in the last two years with our advice. Regardless people should always look to multiple sources for information so here’s a few:
http://www.msnbc.msn.com/id/30988937/
http://money.cnn.com/2009/05/28/real_estate/new_home_sales/index.htm
http://news.bbc.co.uk/2/hi/business/8034450.stm
http://www.bloomberg.com/apps/news?pid=20601087&sid=axAR9G.3wM80&refer=home
http://www.msnbc.msn.com/id/30979615/
http://www.reuters.com/article/newsOne/idUSN2831774020090528
Those are just off the top of my head so to speak.
We’re in the market every day and we know our business though we certainly wouldn’t claim to be economic guru’s, we are seeing a significant shift and we’re quite sure that if you are on the fence waiting to see if you can get a better deal you’re going to miss the boat and you’ve already missed interest rates under 5%.
Whats worse is you could even end up in a lending backlog causing you to miss the deadline for the $8,000 tax credit because remember, you have to CLOSE before December 1st. I know, I know, the deadline is WAY OFF on December 1st right? Well, sure it is and how many other people are thinking the same? How many other people will put it off, hoping prices fall another 2% in the next 6 months? What will happen when all of those people scramble to take advantage of it in August? September? Will lenders still be able to close a transaction in 30 days with that kind of a rush? Lenders are already warning Realtors about the backlog they are expecting then, some even saying it could take as long as 60-90 days to close a transaction then. So lets say you wait until September, in our experience average time to find a home is 30 days. So that puts you at finding a home and making an offer in October. At that point your lender (and every lender) tells you they need 60 days to close a transaction…you just missed the tax credit deadline.
Additionally we’re hearing more and more about the potential for significant inflation on the horizon which could cause interest rates to spike sharply to slow inflation, if that happens we could be looking at double digit interest rates in the near future. Will it happen? No one knows but it’s certainly possible and you should be aware that it’s possible.
I was about to get into the competitive market we’re seeing right now, but realized that should be another blog entry as it’s another topic, so consider it part 2 to this entry I suppose, coming up next!
