Lindsay Robbins Blog

You all have heard the saying when it comes to real estate it is all about location, location, location. But in a challenging market it can be timing, timing, timing that makes all the difference. How many of  you have said to yourself, “I wish I would have sold two years ago?” or “I wish I would have waited and bought now with the low interest rates and the tax credit program available now?” Well if you haven’t said the latter, I am here to give you forewarning you might be thinking it in a year from now. In today’s USA Today, Financial Reporter Sandra Block reported a story today titled , ” 2 reasons to buy a home now: Rates low, tax credit ends soon.” In the article she sites 5.12% interest rates on a 30 year fixed loan and the $8000 first-time home buyer credit (those who haven’t owned a home in three years also qualify) as two main reasons to buy now.

A good real estate agent can help buyers and sellers apply this information to help evaluate if it really is a good time for YOU to buy Now! So let’s examine this further:

If you bought a home today for $300,000 and financed $300,000 (for sake of ease) at 5.12%. Your monthly payment would be $1632. 54. The total interest paid over 30 years would be $287.713.72

Now let’s increase that interest rate just 1% (and we all know inflation is bound to happen and interest rates can’t stay this low forever). Your monthly payment would increase almost $200/month to $1821.86! Total interest paid over 30 years would be $355,870.22. An increase of 68,156.50.

So again let’s look deeper:

In order to make up for this nearly $70,000 increase in interest, home prices would have to decrease at least another 20% for it to be worth waiting to buy. Waiting to buy also means you are renting for another year. At a conservative price for Park City, let’s use $1500 a month for 12 months. So now you have a loss of of $70,000 interest plus rent of $18,000. You would also be missing out on the ability to deduct from your taxes your mortgage loan interest. So a home today bought for $300,000 would have to be priced below $214,000 next year to make up for the rent paid, increase in interest, and loss of tax deductions. And let’s not forget the $8,000 tax credit if you qualify.

How many of you think (this could be my first unofficial poll) the housing market will decrease another 20% in the next year? I am no fortune teller but I would dare to say if we see that happen, we as a nation and individuals, have bigger problems than being “upside down in a house.”  I just don’t see it happening.

Now I know many of you may roll your eyes at yet another real estate agent telling you, Now Is The Time To BUY! An agent you can trust is one who backs up what they say with current accurate information to help you make the best decision for you and your family. It is a lot of fun to make smart financial decisions, be savvy of the market and be able to look back in a few years and say, “I timed it just right.”