Wednesday, February 20, 2008

Is Now the Time to Buy Real Estate? Read This Article in Time Magazine

Whether it's stocks or real estate, there are those who hope to squeeze the most out of the market. When they buy low, nobody buys lower. And when they sell high, nobody sells higher.

That's why this article in Time magazine by Dan Kedlec is so good. In 'Ignore Headlines', author Dan Kadlec addresses the buyers who are waiting and waiting and waiting. They want it all, all time lows in home prices and all time lows in interest rate. But will they get it?

Let's check out the crystal ball. Are the prices still heading lower? And, what will interest rates be when the right time to buy comes along? In his article, Kadlec shows the effect of waiting a year for another 10% drop in the prices of real estate coupled with a 1 % increase in the interest rate (from 5.5 % to 6.5%). If that is to be the case, then the total monthly payment of principal and interest on a 30 year, 20 percent down loan, is actually 63 cents more per month. And as Kadlec says in his article, "'d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be."

Now, nobody has a reliable crystal ball :) but if you're looking for a home as a place to live, it doesn't make much sense to wait.

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