Regardless of your price range, the â€˜Priceâ€™ is only one aspect to consider when assessing the true â€˜Costâ€™ of a home. You should understand that waiting for lower Prices may ultimately Cost you more over time.
If you are relocating, the real question is: are you paying cash and will you be happy buying whatever home happens to be available? Or, are you really looking for a good long term deal and to buy the best property for you, in a community that is right you and your family for the long run, but understandably trying to avoid the problem of â€œcatching a falling knifeâ€? Everyone has to live somewhere, and for most families looking for a stable home their answer will be the latter.
You should expect some sellers will ask for the stars (especially as values decline) while others will be more informed and interested to sell quickly. Those with exceptional properties will generally get more then those with lesser properties. That is all normal at anytime, in any market. And Lake Mary has many more 'exceptional' properties than other areas of Orlando, as too does Windermere. But â€˜askingâ€™ price and â€˜gettingâ€™ price have always been 2 different things, and they are indeed further apart today than in the recent past due to the current buyerâ€™s market.
So, especially in this environment, Before you make any offer you should always know if the offer price is in a reasonable range. Right now, a good starting point is the county property assessorâ€™s 2009 JMV (just market value as of 1/1/2009), and the 2010 â€œworking valueâ€ as of 1/1/2010. Then, a detailed market analysis specific to the property, listing all recent comparable sales, should be provided to a prospective buyer before a contract is ever signed. There should be no question about appraisal or 'value' before an offer is made.
That said, your general concerns about 'price' and hitting bottom are not un-justified. Foreclosures are not likely to abate anytime soon, and values are likely to continue to decline y/y, though at a slowing rate, even here in Lake Mary. However, you should note that in many areas values have already deflated to a point where the replacement cost of the structure currently exceeds the purchase price in many communities. That is to say, the â€˜Costâ€™ to rebuild the home may be $300,000 but the â€˜Priceâ€™ is only $260,000â€¦ from a cost perspective homes are significantly â€œon-saleâ€. By any measure, even if prices do decline a bit further, over the long term buying a good home that is â€œon-saleâ€ and meets all of your personal needs and desires will certainly not be a bad decision.
Most importantly, financing is still tremendously cheap, thanks in large part to Federal Reserve intervention into the mortgage bond markets. However, this support for low rates will not continue forever. A 1% increase in the cost of financing is the equivalent of ~10% increase in the price of the home. So to say it another way, the interest rate of the mortgage debt is by and far one of the most, if not the MOST, important components when determining the true â€˜costâ€™ of any home over time. Understanding this fact is particularly important right now.
Taken together, the already deflated â€œon-saleâ€ prices coupled at the same time with historically low â€œsubsidizedâ€ fixed interest rates makes this a perfect time to buy. Waiting for lower â€˜Pricesâ€™ may ultimately â€˜Costâ€™ you more over time.
Whatever you decide, make sure you have your eyes-wide-open, and that you are working with someone experienced who understands and can explain, all the financial issues which impact your investment decisions.
Palm Springs Realty (Commercial & Residential)
U.S. Housing and Urban Development Approved Broker
Licensed Real Estate Broker, Mortgage Banker, CPA (inact.)