Archive for June, 2013

FOOD FOR THOUGHT FOR FRUSTRATED BUYERS

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 Many buyers in Silicon Valley are getting fed up of having their offers beaten out by other bidders who value the property higher than them. I’m beginning to hear “We’re going to drop out until the market calms down and we can buy at a sensible price”.

IS THAT A SENSIBLE STRATEGY?

Not in my opinion. When the market calms down it will be because SUPPLY and DEMAND have equalized as they ALWAYS DO. When this happens prices will have leveled off at a higher point, and the number of new homes for sale each week will be stable.            

All of us in the industry know prices aren’t going down and neither are rates! And deep down most buyers know it too.

As it stands, mortgage rates on the Conforming 30-year fixed loans are just over 4% for the best borrowers, up from 3.5% (or lower) in May.  

Many incoming buyers are in payment shock. Combined with higher home prices future buyers are seeing their planned for mortgage payment get higher with the new rates.

So What Does Fannie Mae Think?   

When  Yahoo’s “The Daily Ticker” asked Fannie Mae chief economist Doug Duncan if he felt rates would go down, he said rather bluntly, “We do not”.                                          

Duncan did sprinkle in a little bit of good news as well.

“Mortgage rates have probably increased more than the Fed wanted, seeing that they’ve jumped about 60 basis points (.60%).     

“Some improvements in rates are in the near future because all the bad news the Fed is going to slow its mortgage purchases are built in. 

  “We could possibly see a slight improvement in rates for a very short time”.   

CONSIDER:

A ½ % rate increase in a $500,000 loan will cost an extra $9,000 over 5 years,

The current rate of price increases will level off, but at a higher level.

English: Mortgage debt

English: Mortgage debt (Photo credit: Wikipedia)

The end result of delaying will be a higher price with a more expensive mortgage.

 

Is it Time get back in the hunt!!!

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