January 2012 January 11, 2012

Trying To Time The Market: “When are we going to hit bottom!?”


If I had a penny for every time someone posed this question…well, I’d have a lot of pennies.


If you’re trying to time the market, stop! It simply isn’t going to happen. It’s impossible. Okay, maybe you’ll luck out. But chances are, you won’t. After all, the only way to know if we’ve hit bottom is when we see prices starting to go back up.


So, if you’re sitting on the fence debating when to jump off into whatever that scary stuff is on the other side, just remember, (1) it’s not that scary, and (2) wouldn’t you rather be on this side of the “curve” where you know the prices, know the interest rate (historically crazy low), and have the pick of the litter given the amount of inventory? It looks pretty appealing as compared to option No. 2, which is to be on the other side of the curve when it’s trending up, and who knows what interest rates will be doing and how many other buyers you’ll be competing with for the certainly fewer homes that will be on the market.


And if that doesn’t convince you, consider this little piece of real estate “food for thought”:


Interest rates today are roughly 3.875% versus the 6.25% they were at the 06/07 “height”. Figuring that every 1% decrease in interest rate is equivalent to a 10% increase in buying power, a buyer can afford approximately 24% more than they could just four years ago based on rates alone. Add to that the estimated drop in the market of 30%, and our purchasing power has never been stronger. Today we can buy 54% more home for the same monthly payment of four years ago.