Waiting for a bargain, missing the bargain

Dated: July 11 2020

Views: 15

On Christmas Day of 2019, home prices were continuing the steady appreciation that was the trend throughout last year, and interest rates were at a fairly attractive 3.99%. A buyer who borrowed $450K to buy a $500K house that month would be making monthly payments of about $1,907, and the total cost to pay off their mortgage would be $686,648.

Many people expected (especially after the Coronavirus hit) that 2020 might bring a market correction, and they could get a better deal by waiting for home prices to drop. So far, this hasn’t happened—but if prices had gone down 10%, that same house would have cost $450K. If interest rates were unchanged, that would generate monthly payments of $1,716, and a total payoff cost of $617,983. Over the life of the loan, that lower purchase price would mean $68,665 in savings.

Here’s what has happened in the last six months: interest rates have dropped all the way to 2.88%. The $500K home still requires a $450K mortgage, but now the mortgage payoff amount is only $538,047—a savings of $148,601! Long story short—if you have been waiting for a favorable market before looking seriously for a home, you might have missed the fact that it has already arrived.

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As a residential real estate executive with an extensive background in corporate marketing, I am able to apply unusually strong skills in marketing communications, e-marketing, strategic planning and ....

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