By Jeff A. Christie, March 22, 2010
If you are in the market to buy a home, now may be the opportunity of a lifetime.
Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” It may be a bit too ferocious for some, but profiting from the mistakes of others can be one of the greatest ways to increase your wealth. You may have just such an opportunity right now in the residential housing market.
The facts: mortgage meltdown, a real estate led recession, stricter lending, and high unemployment have kept real estate 30-40% down from the peak. It may be an understatement to say there are some buys out there. I have spoken to many people who said they are waiting, although I must admit I am not sure for what. Prices could decline more, but as any investor will tell you, calling the absolute bottom on any market is difficult to say the least. Whether or not prices drop another 5 even 10%, which is possible, the mortgage rates right now make buying sooner rather then later attractive.
Mortgage rates have really nowhere to go but up. I took a look at mortgage rates over approximately the past 20 years, and they have not been this low in that time period. Rates have gotten this low due to government intervention in the financial crisis and the bailouts of Fannie Mae and Freddie Mac, and continue to stay this low due to accommodative policies currently in force at the Fed. How long can interest rates stay at this low of a level? If investing is based on probabilities, what is the probability rates will return to historical levels over the next few years? That being said, this could literally be the perfect storm for real estate buyers, depressed prices and depressed rates. Granted, getting a loan is not nearly as easy as it was a few years ago (thank God), but there are still are lenders out there if you are qualified.
If you are on the fence, take this as some food for thought, but don’t let this opportunity pass you by, as there are a lot of others jumping at this chance.
Good luck, and investing.
Jeff A. Christie
Wealth Manager
Ken Stern & Associates
CRD# 4889641
CA Insurance Lic.# 0F01343