“It’s The Best Time To Buy!” Affordability Explained.
John Paulson said in a recent Forbes article: “If you don’t own a home buy one…if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”
Everywhere you turn people say “now is a great time to buy!”
But have you ever actually explored why everyone is saying that? There is some rational to what sounds like a terrible sales pitch.
Interest rates are at historical lows…but what does that mean to you? Money is cheap to borrow. On average, interest rates are in the 4.5% range on a 30-year fixed loan (and even under 4% if you can swing a 15-year mortgage.)
Prices decreased in 2009….but you better believe they’re on the upswing. On average, the past few months several cities in Northern VA have seen double digit increases in average sale price.
How does that affect how much you can spend and what you can buy. If you’re waiting and thinking prices may come down some more….a drop in prices of 10% is nullified by an increase in interest rates of 1%:
Look at the first 2 columns: just a 1% increase in interest rate increases your monthly payment by $120.39! (in this example) If prices dropped 10% and interest rates stayed steady, you’d only save $98.15!
Think about it. Disagree/agree? Let me hear about it! Laura@TheLJRGroup.com