For several years now the real estate market has been in the favor of the seller with the expectation that the buyer will win when they sell. But that may not be true for very long. According to WSJ, the market is turning. While some economists are predicting everything from stabilization in prices to a contraction in the market, some are making claims of a full out recession. The question is, can a stabilization or fall in housing prices be good for a buyer? Or can it cause the buyer to get stuck in a home for longer than they want?
That depends on you and how you buy.
A buyer's market is when there are more houses on the market than there are people who want to buy them. This is good for the buyer as it gives them the ability to negotiate down versus having to fight their way into a home by offering more. Participating in a buyer's market is like buying a diamond in the rough. It usually involves one of two scenarios. Either you buy in an area right before the market gets hot or when the market has just had it's worst hit. Both are risky. They involve an immense amount of intuition and the willingness of the buyer to take a loss or sit on the property for an extended amount of time if the boom never comes or the market continues to fall.
Selling a home in a seller's market is ideal. What that means is that there are more people looking for homes than there are homes available. You should know that buying in a seller's market is not a bad thing even if you have to make an offer higher than the asking price. Sure, we all want to be that one person who bought 20 years ago in an area that nobody else wanted to live and now it's the best and newest trend spot. But honestly, trying to make that type of prediction is incredibly hard and a complete luck of the draw. At the end of the day, you are buying the neighborhood and what that area provides you and your family. So go with your gut.
Whether planning to resell the home in a few years or in the next twenty years, the most important factor for keeping your home a cozy investment is the interest rate on the mortgage.
What you might pay as the initial mortgage is nothing compared to how much the cost of the mortgage can build up to over time with a higher interest rate. For example, your mortgage is $550K with a $60K down payment and an interest rate of 6.2%.This makes your monthly payment $3810. In 30 years, you'll have paid $1,140,395. In other words, you've just payed more in interest over the course of the loan than you did for the actual house!
To see how an interest rate makes a difference in your mortgage, compare that to a mortgage of $690K with a $60K down payment and an interest rate of 3.6%. In 30 years, you'll have paid $1,091,136 and your monthly payment will be close to the same as the cheaper house at $3,826.
At the end of the day, by choosing a real estate company with quality mortgage brokers that can negotiate a low interest rate for you, you pay the same amount if not less for a nicer home. Stay cozy knowing you have the best interest rate you can get.
To talk to an agent at UNiQ Realty to find the best rates for you, click on the button below.