I Want To Buy But Think I'll Wait...

I am hearing this a lot...I think I will wait to buy a house when the market gets better. Do will you know when the housing market has reached bottom?  The answer is...you will not know the market has reached bottom until it is on its’ way back up.  So in other words, no one can predict the actual “bottom” of any market.  In addition, Jonesboros' market hasn't had the hard blows that much of the country has had.

I can however with certainty tell you that interest rates are at historic lows and there are some great homes in the Jonesboro market that are attractively priced.  

I can also say with certainty that the government wants to stimulate the economy and to do so will start printing money which historically has driven interest rates up.  It is NOW you can get more for your money.  Consider this:  (below information is principal/interest only & based upon a 30 yr loan with 0 down)

Home Price          Home Price                Home Price
 $200,000              $200,000                  $200,000

Interest Rate         Interest Rate               Interest Rate
      4%                       5%                             6%

Payment                Payment                     Payment
  $954                    $1,074                       $1,199

$245. more a month from a 4% to 6% interest rate for a $200,000 home!

Remind you, these low rates are FIXED rates that will not go up.  People have gotten used to today's low historic rates and just do not realize the opportunity.  When I bought my first home in 1989, my interest rate was 9%, a rate common in those days.  When I sold real estate in the early and mid 90's, interest rates fluctuated from 7% - 8.5%.  I am not willing to bet that home prices will go down in Jonesboro but I am willing to bet that interest rates will eventually go up.  Don't believe me?  Look at the following article below.

If HE Says It Is Time To Buy A Home, BUY A HOME! by KCM Crew

“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”

– John Paulson 9/27/2010

WOW! That’s a powerful statement.  There is no question that John Paulson is a bull when it comes to residential real estate right now. Should we care what Mr. Paulson thinks? Should we listen to him? The answer to both questions is a resounding ‘YES’. Here are several reasons why.

Who is John Paulson?

Paulson is the person who made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?

According to Forbes John Paulson is:

a multibillionaire hedge fund operator and the investment genius who made a killing going short subprime mortgages a few years ago.

According to the Wall Street Journal Paulson is:

a hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.

What did other financial players think of his statement?

The Wall Street Journal agrees with Paulson:

Ignore the critics. The odds have to be on his side…It isn’t just that home prices have fallen a long way. It’s also that, if you can get a mortgage, you are basically taking a reverse bet on the bond market. You could be a long-term borrower at fixed rates, instead of a long-term lender. Right now you can borrow for 30 years at around 4.3%. After the mortgage tax deduction, for some people the net effective interest rate is nearer to 3%. That’s going to prove an awesome deal if we see inflation again.

And Forbes said:

As this is the best time in 50 years to buy homes, Paulson advised his listeners to take 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

Are others also saying now is the time to buy?

In the last weeks there is a growing number of people saying that NOW is the time to buy, including:

The Wall Street Journal
Professor Karl Case, founder of the Case Shiller House Pricing Index
The wealthiest families in the country and
70% of everyone else in America

Bottom Line

Thinking of buying a home? Are you taking advice from a friend or family member telling you that now is not the time? It may be time to listen to people who better understand the opportunities that exist in real estate today.

Hope this helps!