Looking for a deal?
"I'm looking for a really good deal." That's what just about every buyer says when they first speak with us about buying a home. Not that they're looking for a particular style of home with a specific number of bedrooms or baths, a specified location or even whether it's a condo, townhome or single-family home. We’re finding that buyers are focusing more on the type of deal they can get rather than what attributes they really want in a home.
Of course, everyone wants a good deal, but it's important not to get so tunnel-visioned that you miss out on the perfect home for you, because you're holding out for the deal of the century. Do you want a good deal on a home you love, or a great deal on a home that's just OK? You have to live there. If you don't love it, is it really that great of a deal?
Waiting for the bottom? Many folks are sitting on the sidelines, waiting for the bottom of the market before they’ll jump in. If that sounds like you, how will you know when the market has bottomed out? Market timing is a tricky game to play. Check out the graphic below:
Let's say the graphic represents the housing market. Although the market is cyclical, with ebbs and flows,, most people tend to think in a straight line. Point A was near the peak of the market. Although the market was overinflated, many people thought that prices would continue to climb. This was a contributing factor to the "bubble" that occurred in some markets.
Then, the market began to take a turn in the opposite direction.. Let’s say that now we're at the other end of the spectrum (point B). The market has turned downward and people wonder if we’re near the bottom. The big question on everyone’s minds: When will we know that we’ve hit the bottom and it’s time to get off the fence and start buying?
The answer: Just like the economy as a whole, we won't know for sure that the market has turned until data from previous months are analyzed. In other words, we won't know we're at the bottom until the bottom is already behind us.
So, at what point would you rather buy a home? Point C represents the beginning of the upswing. Both B and C are at the same level on the vertical price scale. The difference is that at point B, people (i.e. sellers) think that prices will continue to decline, whereas at point C sellers think that prices are on the rebound. At which point do you think you'll have the greater negotiating leverage?
(The correct answer here is B.)
What about interest rates? Well, they're at historic lows, too. Buyers can get 30-year fixed-rate mortgages with rates of less than 5%. The federal government a couple of weeks ago made another move, effectively pumping $750 billion into the mortgage market, which should drive rates even lower into the 4's over the coming weeks. So, if you want to take advantage of this "perfect storm" of low rates and low home prices, the time to get in gear is now. Years from now, people may be saying, "Darn, I wish I had bought back in 2009!"