I am afraid Low Prices + Low Rates ISNOT= Affordability right now. Affordability went out the window 4-5 years ago. I think the new equation will be
Drastic Price Cuts = Affordability
I think everyone's interest will be best served if agents were to impress upon the sellers to reduce prices dramatically so that we can get over this phase quickly and resume normal business.
Real Estate is local and if you are finding home prices dropping in a particular area you want to buy in, you may want to take advantage of that now. As long as your ability to get financing is in good order and your credit is in good shape, the combination of home prices going down and interest rates still being low is a combo you may want to take advantage of sooner rather than later.
As an example, assume the average first time home buyer can afford $1500 a month in home costs. At 6%, that's a $250k mortgage. If rates rise to 10%, that payment only affords a $170k mortgage. Did this average buyer suddenly come across more money due to rising rates? No, they can still only afford $1500 a month.
The seller would have to make up the difference.
Since you asked this question some 5 months ago, you've probably had it (somewhat) answered by now. My 'additions':
-- Monty Cty is a big place, even Bethesda is. Outside the Beltway is 'soft' and will stay that way, (for obvilus reasons...gas $, traffic)
-- Zips 20815, 20816 inside the Belt way are strong 'micro-markets'. Prices have been rising and in my opinion they will continue to do so.
To 'call' prices, you have to 'call' interest / mortgage rates. Rates go up, prices come down, but monthly payments rise. Bit of a trick...just ask an economist! My solution:
-- Take your time finding a house you REALLY like
-- Make as aggressive an offer as is possible, (average MC discounts to "list" are running about 8% today)
-- Get yourself into a nice-long, (still historically low interest rate)
-- Enjoy your new home!
As to the shills who are shouting from the rooftops that all real estate is local (reminds me of that joke of an NAR president, David Lerah) well, guess again. Check out the Case-Shiller home price index and weep.
Well, we find out about the uptrend when we are already in to it. So, what is this mean? Montgomery Real Estate market start going up starting March 30th, peak at June/July, nose down mid July, up swing after Labor day and by end of the Oct nose down. This mean 2nd and 3rd quarter market is warmer than 1st and 4th quarter.
Recommendation- Low Price + Low Rate = Affordability, and means now is the best time to buy. Today you have more options to choose, and you have upper hand to negotiate. Next year, rates may be higher, sellers will not be as flexible, and demand may increase the price.
Last word â€“
Donâ€™t wait to buy Real Estate, Buy Real Estate and wait!
Real Estate Consultant