BUY NOW? WAIT? What's a Home Buyer to Do?
MANY WAIT - BUT THEY ARE MISSING BIG OPPORTUNITIES IN TODAY'S REAL ESTATE MARKET!
Currently, our Team is working with three comparatively-serious couples considering buying a small home or condo in the City of Chicago, or in a suburb close-in. Each one of them, however, continues to be non-committal. They are procrastinating - WAITING, before they sign a contract to buy. Waiting, and waiting some more.
Each feels prices will fall further - they read the papers, you know. They are concerned about foreclosures, starkly visible through the boarded-up houses you see every once in a while in the very neighborhoods in which they are looking in. Low-down-payment financing is harder to come by - even for those with good credit. And, if you do put low money down, added Private Mortgage Insurance increases the projected monthly payment.
We still see many sellers here in Chicago that don't realize the real estate market has shifted here! A recent survey conducted for consumer Real Estate Information website Zillow.com by Harris Interactive shows that 2/3 of today's home sellers feel their property values have remained stable or INCREASED since last year - despite real-market data to the contrary.
Summed up - buyers today feel FEAR, and FRUSTRATION. They don't want to pay too much, and don't want to get in over their heads. Most don't understand today's real estate market offers some excellent reasons to buy now. Here are a few -
1. LOW MORTGAGE RATES. Rates for fixed-rate mortgages are at or near their historic lows. For most credit-qualified home buyers, home mortgage loans can be found around the 5.75 to 6.25 percent range. Further, those with good credit histories and 10-20% down payments still can find a good, competitive home loan.
2. COMPETITION. In the salad days for sellers, about two to three years ago, many houses sold in MULTIPLE BIDS, some considerably over their asking prices. Investors, expecting fast, predictable appreciation, would compete for the lowest-priced properties. Taken together, these facts drove up the price on the average home. Today, investors just can't justify the same fast, high return, and fewer buyers are out there. Less competition results in a better purchase price when you buy!
3. LESS RUSH TO ACT. In many cases, less competition means you can think over your buy decision rather than rush right into it out of fear you will lose your dream home. This is not an unlimited license to procrastinate - the nicer homes still sell, for good money, if they represent good value.
4. REPAIRS. Although not an opportunity to completely renegotiate the transaction based on minor flaws, buyers today rarely have to purchase many homes "as-is," waiving their right to inspection. Unless the house is distress-purchased (foreclosure, estate, or short-sale), sellers are generally being more reasonable about such "health and safety" repairs such as roof leaks, broken windows, or problematic furnaces. It was tougher to address even the more serious items with a seller when the market was hot, a couple of years ago.
5. NEGOTIATING FLEXIBILITY. The Baby Boomer Generation may remember a TV game show from the 60's and 70's called "Let's Make a Deal!", hosted by Monte Hall. Today, everybody fancies themselves as Monte - they have free reign to get their new house cheap, because the sellers are desperate. Although not always true, many sellers are offering discounted prices due to their perception of market conditions, along with lessened interest in their home due to very high levels of competitive inventory. When the market returns to balance, as most predict it will sometime soon, sellers will naturally offer less flexibility - many bargains will be gone!
For further insight, check out Lew Sichelman's article in today's Chicago Tribune.
Then, fence sitters - BUY SOMETHING, while the best opportunities are out there!
DEAN MOSS & DEAN'S TEAM CHICAGO
