Waiting for a bargain, missing the bargain

Dated: July 11 2020

Views: 0

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.

Blog author image

DAVID DUNLAP

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 ....

Latest Blog Posts

Disproportionate value

When I’m guiding a negotiation on behalf of my clients, I look for disproportionate value that we can use to create an advantage. If a buyer offers an additional $10K to buy a house, the offer

Read More

Shut your mouth!

The current seller’s market is a popular topic of conversation among both agents and clients these days, but a recent conversation shows how casual talk can sometimes go too far. A modest-

Read More

No reason to wait

Prospective clients often beg off from meeting with me because they think they’re not close enough to the time when they will buy or sell a home. I always push back on their reluctance, not

Read More

When is a salesman not a salesman?

A few months back I was shopping for a good used car, which gave me some fresh experience with the other side of salesperson – prospect conversations. I struck up a pleasant relationship with

Read More