November 3rd, 2008
A Good Time To Buy?
I t seems almost every day I’m asked the question, ” What do you think the economy is going to do”? Of course, I don’t know the answer to the sweeping overview of that question, but I do have some insight about what is happening in Skagit County. We have seen our home values decrease. This decrease has not been as large as in other areas of the country and I believe it won’t be. We have had strong home sales and have seen an increase in their value though the last few years but these trends were not as “ridiculous” as other areas. We have had a strong market and now we are experiencing a typical economic adjustment to what has happened here and elsewhere. So, the real question is “Have we seen the market bottom”? The answer is….. who knows! BUT, we do have some good indicators and signs of opportunity. There’s probably never a single day that is the bottom anyway. Some homes may be at their bottom while others aren’t. I believe the bottom is in fact a moving target.
Windermere continues to see strength in the market. There are numerous homes that appear to be value priced and interest rates that are historically low at the same time! Too often, we see one or the other of those issues, not both of them together. This indicates that now could well be a good time to buy. Buyers should always consider the mortgage rate when buying a home. For example, if home values decreased by 5%, but rates increased 1%, you would loose! Over the long haul, rates are probably more important than price. The compounding of interest always is the enemy. The shorter the term and lower the rate is what your looking for when considering any investment. At this point in time, rates and prices are low, so the real gamble may be doing nothing!
Here’s some food for thought, if you are considering upgrading to a more expensive home now could be a great time. The home prices are down and the amount you can qualify to borrow is up! Say your home value is down $25,000.00 from $300,000.00 to $275,000.00 or 8.3%. But if you find a home that was 450,000.00, and it went down 8.3%, the price would be $412,650.00, or a savings of $37,350. You would still be ahead $12,350.00 in financial terms, and, you would get the house you wanted at a premium price.
However, if you want to downsize for security or family reasons, then you may consider renting or a lease option as an alternative. The very fact that you can afford your current more expensive home, indicates you might want to consider this type of a deal. You are undoubtedly going to get more home than you could have a year ago. This is important to you because you might be able to get an affordable 15-year loan in a less expensive home! Now may be an optimal time for you to get your financial matters in order. “Timing” is everything in investments, and this could well be better timing than you think!
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