Ignore the news and tune out the chatter “the sky is falling” is easier said than done. If we are not in a recession, then we act like we are. We have allowed fear to become the overiding factor causing many to do nothing when it comes to investing in real estate. One should remember that real estate is a long term investment and has proven to be one of the best investments overall. Of course, there should be some skepticism and caution given the current outlook of our economy, but skepticism and caution should be tempered with reason and logic and not become out and out fear.
From Right on Your Money by Dan Kadlec in Time Magazine, Dan writes, “There has rarely been a moment in history when you couldn’t scare yourself into doing nothing. …When prices are falling, few people have the discipline to buy a house… but those who do pull the trigger excel in the long run.”
It seems we are experiencing one of those rare moments where many potential home buyers have been scared into doing nothing. The Federal Reserve is cutting short-term interest rates faster than any other time in history and rate cuts tend to improve the economy in time. Yet home buyers continue to hesitate. The end of the recession, if there is one could actually be in sight.
If you have good credit and plan to stay in a home for at least five years, then it’s time to get serious.
Now is the time to buy before interest rates start to rise and they will sooner or later. When they do, this will wipe out any gain you think you might have by a further drop in prices. Also, home prices may stabilize and sellers may become less willing to negotiate.
Dan Kadlec uses this example:
Today’s Typical Home Price: $218,900 20% down payment and a 30 year fixed rate mortgage
Current rates after recent declines 5.5%
Monthly Payment: $994.31
Cost in 12 Months?
Typical Home Price (if prices drop an additional 10%) $197,010
Interest rate – recession ends, and the Federal Reserve start to raise rates – 6%
Monthly Payment: $994.94
Conclusion: If you waited a year to buy, you would have saved nothing !
Note: Interest rate quoted to me by a local lender on 2/28/08 was 6.375 (already higher than what Dan used in his example)
Single Family Residential Home Sales – Fannin County – February 2008
Sales were down almost by half in Fannin County in January 2008 compared to January 2007. But, February 2008 is showing a different picture. Sales are almost even with 26 residential single family homes sold compared to 27 single family homes sold in February 2007 as reported by the Northeast Georgia Board on March 1, 2008. Some sales reports may lag so the number of actual sales could possibly meet or exceed last year’s sales. The gap is closing!
Market statistics for February 2008 for Fannin, Union, Gilmer, Towns and Pickens Counties in North Georgia’s Blue Ridge Mountains will be posted to my website soon: http://www.move2northgeorgia.net/
Donna Yates, Georgia Realtor, serving home buyers nationwide. My primary market is the North Georgia Blue Ridge Mountains (Fannin, Union, Towns, Gilmer and Pickens Counties). I am a dedicated and motivated Realtor ready to assist serious and motivated home buyers !