Realty Viewpoint: Why You Can't Outsmart The Market
A deluge of discouraging news from rising mortgage interest rates to falling stock prices have economy watchers moaning that the recession is here and housing is going to get worse. If you're a buyer waiting for mortgage interest rates to stay low, you bet on the wrong horse. According to Realty Times' own David Reed, mortgage interest rates shot up this past week at the fastest pace in 20 years taking homebuyers and refinancing homeowners by surprise. Just when things were beginning to look rosy for early spring housing sales, the bond market went south, and the yields went north. Mortgage interest rates are tied to the sale of mortgage bonds and mortgage-backed securities. Homebuyers hearts weren't in it as mortgage applications sank over 22 percent (22.6 percent). Purchase applications fell 11.55 percent, and refinancings dipped nearly 28 percent (27.9 percent) during Valentine's week. Translation? By waiting just one week to finance, you added $50 a month to your monthly mortgage payment thanks to higher interest rates. Hindsight is 20-20 so you can see well enough to kick your own butt. But don't despair. Just consider a little lesson in market timing. It doesn't work. All you can do is watch the indicators and make your move when you think the most variables are in your favor. For example, interest rates are higher, but if you move now, you could still take advantage of the higher conforming loan limits. FHA loans are 125 percent of your area's median price. Now might be a very good time to buy a new home. The credit crunch is adding to builders desperation. They're finally realizing that they can't keep adding to stagnant inventories. New construction in January fell to a 17-year-low. They're slowing down on new single-family homes and accelerating starts on condos and apartments. Both new and existing homes are at a nearly 10-month supply, so now's the time to negotiate better terms. Keep in mind, there are only a few things that matter when you're buying a home: getting the home you want, at the price you want, at an affordable monthly payment. If you get all three, you've made a good deal. The housing crunch won't last forever, and when it turns, think about where you want to be -- with first choice or the leftovers?
Written by Blanche Evans
February 22, 2008
GOOD NEWS,
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