Is it a good time to buy a home?
June 17, 2008
There are thousands of home buyers sitting on the side lines trying to time the very bottom of the housing market, wondering when the time to buy may be. The time to buy may have already passed many of these individuals by. The opportunity to purchase a home at the very rock bottom of prices may be overshadowed by the offset of higher mortgage interest rates. The month of June has seen mortgage rates increase by over 1/2 of a percent on most loan programs. This rapid increase is equivalent to about 10k in price negotiation on a 200k mortgage when assesing a home purchase. The half of a point increase raises a borrowers payments by approximately $60 per month for the entire loan term.
Home buyers who are contemplating purchasing and still need motivation should look towards the stock market and comments regarding inflation and the fed funds rate for further motivation to move forward. Many economists now believe that the Fed will be forced to raise the fed funds rate in the fall of 2008 to help stem the rapid rise of inflation, primarily caused by the rapid increase of oi prices. Mortgage rates are not likely to decrease should inflation keep rising as sharply as it has in the past two months. For every 1/2 percent that mortgage rates move up on a 200k loan, it affects the borrowers net buying power by about 10k. Meaning, they are now paying the same payment on 190k as they would have had at 200k due to the higher interest rate.
Housing market to be focus for stock market this week
May 18, 2008
The stock market has enjoyed a nice rally over the past month despite rapid rising oil prices. The national association of Realtors will report existing home sales for the month of April on Friday of this week. The market has written off the idea that the real estate market will recover significantly in 2008 and most economists, home builders and mortgage companies are now stating that they think it will be well into 2009 before the market begins a true correction.
The significance of Friday’s report is mostly about the psyche of the American home buyer, if the report shows a glimmer of home this may help to provide some long awaited positive pr for the real estate market. The number of potential home buyers sitting on the sidelines anticipating further price drops may decide that the market does not have much further to fall and begin the process of looking for a home. Mortgage rates remain very attractive and recent changes with both Fannie Mae and FHA are allowing home buyers to get into homes with as little as 3% down payment.
The market could use a lift, if the home sales figures are better that anticipated the stock market could rally and the only downside is this may pressure a rise with mortgage rates which remain firmly near six percent.