Are you waiting for the market to get better before you buy??

by Robert Mack on July 1, 2010

in Irvine Real Estate

There are 2 kinds of buyers right now in Irvine, Orange County.  The one who see the opportunity in buying NOW and those who want to wait in hopes that the market will get better.  No one has a crystal ball, therefore the market could get better for buyers or it could get worse.  I like to say “market” because it is easy, however for clarification purposes, let me break down what I think a good market is.Irvine Real Estate Crystal Ball

For the most part, a good market is one where home prices are affordable to buyers, sellers are motivated to sell, inventory is high and buyers have choices, and MOST IMPORTANTLY interest rates are low and financing is available.   If you follow my blog at all you will know that for me, interest rate is EVERYTHING because it is long term.  I tell my clients all the time…”I would rather buy a home with a 4.5% interest rate now rather than wait for the home to fall 10% in price with a 5.5% interest rate”.  As a rule of thumb, as home prices fall 10% in value, if the interest rate goes up 1%, the payment is almost the same.  In some cases, a buyer may even have a higher monthly payment for a home they paid less for because of the type of loan they got.  Are you more concerned with having a lower monthly payment for the home you buy or are you more concerned with telling your friends and family how much you paid for the home? 

What I am seeing RIGHT NOW is amazing interest rates (4.5% – 30 year fixed conventional), and great summer inventory for the most part.  Down the line, who knows what will happen……

Will we still have more foreclosures and short sales coming up?  I’m confident we will!  Will these foreclosures and short sales negatively affect the “market”?  Maybe…It just depends on the buyers, whether they wait or continue to buy homes at the rate they are now.  Like I said before….I am very big on long term and not so much short term (purchase price).  I love it when interest rates are amazing since that will have a long term affect on monthly payments.  Where price is NOW, monthly payments are long term and with a high interest rate your payments can add up if you are not in an ideal financing situation. 

Many buyers have the mentality that interest rates are not that important because they can wait and buy a home at a lower price with a high interest rate and refinance in the future, however that strategy still creates a high level of uncertainty in my opinion because a buyer will never know for sure if the rates will get back down to a good rate or when they will get down to a rate of where we are now.

Money in Irvine Real EstateI typically go with what I know now (the sure bet)….and less with hoping what they will be or guessing what will happen.  What if prices drop another 10% and while that happens interest rates go to 6.5% (which is totally a possibility) and stay that way for many years, or even worse go higher in the 7’s or more?  Then you are stuck paying a much higher monthly payment for a home you actually paid less for, with no hopes to refinance like you had planned.  This isn’t my prediction, but this is definitely a possibility which most buyers would like to avoid.  No one really knows what will happen so that is why I am big on the “what we know now”.   If we are going to guess, I think it is best to guess the best case and the worst case scenario so there are no surprises or regrets.  Most people hope for the best and never plan for the worst (which is why we are in the mess we are in now).

Are you going to take advantage of what we know now or are you just hoping for the best case scenario?

To search for homes now and see what is availalble go to http://www.IrvineRealEstateLink.com Today! To learn what you will qualify for as a buyer contact the Mack team at 949-209-7309.

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Post by Robert Mack

Robert has written 724 articles.

{ 3 comments… read them below or add one }

Windham NY Real Estate July 22, 2010 at 11:02 am

Informative article. Real Estate is having a big part on the business world, on real estate, selling is not as easy as eating peanuts, you need to have the guts, proper marketing and being honest on what you are selling but definitely real estate is really a great investment because it gives a lot of opportunity.Brainard Ridge Realty is a full-service real estate brokerage and development company, specializing in Timberframe and Custom Log Homes.

MN Homes for Sale July 26, 2010 at 5:50 am

Here is what my crystal ball says about my real estate market in Minnesota:

Prices will continue to fall. There is a huge shadow inventory of MN homes out there.

Rates will go up now that the Fed is no longer purchasing mortgage backed securities.

France Dayne August 20, 2010 at 8:06 am

It’s very hard to manage real estate business. I hope people behind this investment would have patience specially when they know the market is going down. They helps us a lot!

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