June 18, 2010 // Franchising.com // MORRIS PLAINS, N.J. – When making a large purchase, patience can be a virtue. In fact, it can often help buyers get the best bargain possible. Yet, when it comes to purchasing real estate during the most affordable market in recent memory, waiting can actually cost prospective-buyers a good deal of money and a great opportunity.
"Anyone who tells you it pays to wait when buying a home doesn't have the facts straight," said James M. Weichert, president and founder of Weichert, Realtors. "That might have been good advice a few years ago, but today's conditions are so favorable that it simply doesn't make sense to hold out for a better opportunity that isn't likely to come."
Record-low interest rates and attractive home prices have combined to make the current housing market one of the most affordable in decades. Recent figures from the National Association of Realtors illustrate the swing in first-time homebuyer affordability. The average sales price of a typical starter home dropped nearly 24 percent from 2007 to 2010. That equates to a savings of $40,000 on the purchase price of a home.
The same report shows that interest rates dropped from approximately 6.5 percent to 5 percent to make a home purchase even more affordable. As a result, a first-time buyers' monthly payment dropped nearly $400 from $1,083 to $709 and the income needed to qualify to purchase a starter home dropped from $52,000 in 2007 to $34,000 today.
It seems clear that purchasing a home today is more affordable than it was several years ago. Perhaps the even more compelling reason to buy now is the fact that a home purchase is likely to cost more in the future. With signs pointing to increasing interest rates in the coming months and with home prices stabilizing or even increasing in most markets, waiting to buy a home could cost a prospective buyer thousands of dollars each year.
For example, the monthly payment to purchase a $300,000 home with 10 percent down and a 30-year fixed mortgage at an interest rate of 5 percent would cost $1,449. However, if rates rise to 6 percent, that same purchase would have a monthly payment of $1,610, costing those who wait more than $2,000 a year. And if you factor in a 5 percent increase in home prices, the additional cost rises to more than $3,000 a year.
"With interest rates virtually as low as they can go and with home prices stabilizing, it is hard to envision a scenario where it becomes more affordable to buy a home than it is today. If homeownership is something you envision in your future, I would act fast to make sure you don't miss out on this once-in-a-lifetime opportunity," added Weichert.
Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance.