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Why Now Is A Great Time To Buy A Home! Despite What You May Have Heard



There has been lots of talk that the "housing market is crashing". But, despite all the chatter, the housing market is not crashing! I believe a more appropriate term for what we are seeing in the Bay Area, is that the real estate market is "stabilizing" and adjusting toward a more balanced market.



You must remember, that 2020 and 2021, were not by any means representative of a "normal market". The Coronavirus pandemic and subsequent shelter in place orders, fueled what can easily be described as a buying frenzy. Folks, not just wanted, but required more space, demand for housing was extremely high and as a result, inventory remained low. We saw home prices surge - but still remain affordable as they were offset by record-low interest rates.



Fast forward to today, from just earlier this year, and interest rates are sitting a little above double where they were at.


Naturally, to most buyers, this feels like homes, are now significantly less affordable. In fact, I believe buyers are under the impression that because interest rates have doubled, so will their respective mortgage payments. But this is not the case!


My suspicion is this misinformation has contributed to the wane in housing demand, as you likely have heard, there are more properties available on the market , and overall, for longer periods of time. Additionally, for the first time, in a long time, sellers are actively negotiating with buyers on price and terms.


Which Makes Now a Great Time to Buy!!


Yes, rates are higher, but housing prices have moderated, and

the overall outcome is actually far better than most would think.


Senior Loan Advisor, John Assily, with Cross Country Mortgage put together a stellar, hypothetical side-by-side demonstration of this:



Using a hypothetical scenario from a year ago:

purchase price $1,400,000

3% rate on a 30-year fixed mortgage

with a standard 1.25% for annual taxes



In comparison to a hypothetical scenario representing current market conditions:

20% discounted purchase price $1,120,000

with an increased rate of 6.25%

with a standard 1.25% for annual taxes



The results may surprise you!!



Note: this won’t necessarily translate to all areas, but it does give you some food for thought.


With the 20% lower sales price and higher rate, the monthly loan payment rises by $794.86, but because you are paying a lower purchase price, the property taxes drop by $291.66 per month. Therefore the net increase is just - $503.20.



Oh yeah, and the down payment is actually $56,000 LESS.

Which overall is a much better leverage for your dollars.



More Good News!


While it cannot be guaranteed, but is very likely, if an opportunity to refinance comes up in the next couple of years, and you could drop your rate to say 5% (and it could perhaps be even better, but let’s be conservative here), that loan payment drops by another $700.


This puts your monthly payments below where they actually would have been at the $1.4m price point, with the 3% mortgage.

None of this, even taking into account, any seller financed buy-down options, or buyer credits, that I may be able to further negotiate for you, to save even more money!



The Takeaway


Nationally, experts don’t expect prices to come crashing down, and the level of price moderation will depend on factors such as supply and demand in each local market.


Moving forward, you can expect to see home price appreciation continue to vary by location, with more significant changes happening in overheated areas, such as the Bay Area.

If you are considering buying or selling a home, would like to see a different side-by-side cost comparison, or have questions about what’s happening with home prices, I would love to schedule a time to discuss up-to-date local market data with you, so that you can make a confident and informed decision on your next step toward buying or selling.


Real Estate with Nina Brown

Making Your Next Move, Your Best Move!




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Content by Nina Brown Alameda Realtor

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