Whether you’re looking to purchase your first home, or looking to expand your investment portfolio with the inclusion of real estate assets, you have probably found yourself a bit hesitant to step into today’s market. There has been plenty on the news, and many of your friends and family have been talking about it. We are in a seller’s market and buyers are being met with an increasing level of competition when looking to purchase property. For many, this elicits a sense of fear and hesitation, often stalling a move to action that could result in a costly mistake. Although it may seem counterintuitive, buyers need to step away from the “seller’s market” label and challenge the idea that now is not the best time to buy. In fact, many market factors are still making this an ideal time to find property and the time to act is certainly now.
A simple change in thinking and approach can help you to realize why stalling in the purchase of your home could end up being costly. The most notable factor in this whole equation is the interest rates. They are still at historic lows, and right now, money is cheap. But, they will not stay there forever. In fact, I believe you will begin to see a steady rise in these rates over the coming months. You can bet the Feds are watching our market closely, and given the economic collapse of the mid 2000’s, you can count on them taking steps to slow a rapidly moving market and prevent a repeat of history. If, and when this occurs, your affordability will decrease with every uptick of the interest rates. For every 1% increase of the rates, your affordability decreases by approximately 10.75%. So, that home you were looking at in the $500,000 price range will go out of reach and now you will need to readjust to a max price of $450,000. When you couple this with a gradual and steady increase in home prices, you can see how quickly the home of your dreams can slip out of your reach.
Feeling a bit anxious? Good. That’s your mind realizing it really is time to act, but you still have fears about how difficult the process is going to be. This is where a good agent needs to be in place to help guide you and coach you through the process. Start with a change in mindset. Realize that if your affordability is currently at $500,000, you need to look at property priced below this in anticipation of having to pay above the asking price. Lets face it, the competition can be tough, so having money to negotiate with will be in your best interest. If this feels uncomfortable, just remember that as the money gets more expensive, that home may soon be out of reach. Often times, the pain of paying over the asking price is outweighed by having the home of your dreams, especially when waiting can cause you to watch it sail off beyond your financial capability. With a thorough market understanding and analysis, the right agent should be able to guide you through the appropriate strategy and find success in getting you a property that meets all of your needs.
If this article is speaking to you and you would like some assistance or professional advice on where to go from here, give me a call or send me an e-mail today. I would be more than happy to discuss your situation and help come up with a solution that can assist you in getting all that you want out of your real estate investments. You may also know of someone in need, and please don’t hesitate to send them my way. Remember, now is the time to act. Change your mindset, don’t become discouraged by the “seller’s market” label, and lock in that interest rate at these historic lows.