NOW Is the Time to Buy!
Updated: Jun 16, 2020
Recently, buyers have asked, “Is it the right time to buy?” Buyers are feeling comfortable going to view properties but they still may not have confidence in buying and wonder if they should wait a few months. Our advice is, “BUY NOW!”
There is a unique opportunity in real estate as a result of the pandemic. We believe the current market is an ideal time for people to buy and make purchasing a home a great investment. A couple of factors contributing to this are:
Interest rates are at historical lows.
Massive stimulus packages the government provided has caused more money circulating in the economy.
Low interests rates have always encouraged buyers to purchase property Now, interest rates are historically low. Lower interest rates mean lower monthly payments. Currently, a $1 million home has a lower monthly payment than just a few months ago. Essentially, this means you can afford more of a home or if you stick with your original budget, your monthly payments will be less.
The recent stimulus packages caused a greater circulation of money in the economy. Under the “safer at home” mandate, many people needed assistance and the government solved this immediate need. This will have an impact on the future. Within the next 3 years, we anticipate inflation. The money supply has grown faster than the economic output. Prices will go up. When there is more money circulating, people have more money, and buy more. When people are able to spend more, sellers increase prices. This is great news for home owners. Prices will be going up. Equity will be increasing.
To balance the impact of inflation, we expect an increase in interest rates in the future. An increase in interest rates slows down the circulation of money, reduces inflation, and sadly, buyer’s ability to purchase. Buyers in the future will be experiencing higher mortgages. A $1 million mortgage in the future will have a higher monthly expense than in today’s market. In addition, today’s $1 million home will be worth more in the future. What you can afford today will be out in the future.
The above factors signal a HOT time to buy, NOW. Buyers have greater purchasing power because of low interest rates. The sooner buyers purchase, they will experience a greater increase in property value over time. The property will have more equity in the long term.
Buyers may ask, “What’s wrong with waiting a few months?” We have two concerns about waiting. As time goes on, interest rates and values will rise. Before the pandemic, supply was low and demand was high. Since the pandemic, demand is even higher as the value to own a home has increased. Demand always pushes prices higher. Buyers will not be able to save fast enough to adjust to the rise in interest rates and values.
Don’t wait. It is an ideal time to buy and build equity fast as values increase. To learn more about the steps to buying, give Steve Day a call at 310-529-6456!