Last Updated on
Is now a good time to buy a home? Many are asking me this question. My answer has little to do with the fickle market and everything to do with you.
Two or three polls are sending conflicting information to home buyers right now, and it’s time we had a heart-to-heart.
Everyone wants to know: are property values rising or are they declining?
The local real estate news shows that all but one of the cities surrounding Lansing reported an increase in the average actual sale price of homes this past year. That seems like good news.
Robert Schiller, the creator of the Case-Schiller RE Index, said today that all 30 cities he analyzes annually has declined over the past year and that we could see another 15% to 20% decline in the housing market before we reach the bottom! Another 15 to 20 percent!
You may have also heard that the National Association of Realtors overstated the number of home sales over the past few years. Although it is very likely that the overstatement was minor, it does make you wonder.
Some say it’s up. Some say it could still go further down. Others say we don’t even have the right information.
So, what’s the right answer? Is it up, down, flat?
We want the truth. Not projections and predictions.
The truth is we don’t know what will happen in the next three years here in Michigan.
The truth is this: Only new and unknowable information can change the future.
What I do know is this:
- My client just purchased a home for $127,000 yesterday that still has a taxable value of over $80,000. That means the township thinks the home is worth more than $160,000. The home had a taxable value of $110,000 at its peak. Someone at some point paid over $200,000 for this same home not too long ago. This is true. This home is a far better deal today than it was three years ago.
- A 15% decline on a lower sale price is less of a dollar drop than the first 15% was. A home that was worth $200,000 and dropped in value by 15% saw a $30,000 decline in value to a new value of $170,000. The next 15% drop is not another $30,000. The next 15% drop is $25,000. 15% of a lesser number is a lesser number. Don’t let the statistician fool you. Remember, figures never lie, but liars figure.
- Homes purchased three years ago using a 30-year mortgage would have the same payment as the same home purchased today using a 15-year mortgage. This is a serious advantage to the buyer. Writing the loan in this way will cause the buyers home equity to rise over a three-year period even if the home’s value declines 15% during that same period. Home buyers can gain home equity in a declining market. This is true.
Even though markets are uncertain, you can have a good amount of certainty if you are asking the right questions.
Now is the time to be working with a local, full-time Realtor you trust and a lender who does not try to predict the future.
You don’t have to place your future success on the hopes of a rising market – you can succeed in any market if you structure the deal right and make the decision to buy a home that you can afford when you can afford it.
Be sure this time.