Real Estate
Buying Real Estate in this Market
An elderly couple celebrating their 50th wedding anniversary invited their friends and family for the celebration. The grey-haired couple looked jubilant, and in tune. One of the guests, who recently got married, was absolutely mesmerized by the couple’s enthusiasm and affection toward each other, and asked them, how they managed to get that far without any problems in their long and happily married life. Mr. Golden Jubilee responded with a smile and said that they had a clear understanding on who made what decisions in the house. “Most of the major decisions were made by me, while all the minor decisions were left to my wife.” Mr. Guest was more intrigued by his answer and went on to ask for more details, “Sir, can you please explain the kind of major decisions you made and the minor decisions your wife made?” The man replied, "Son, it is very simple. While I was making all major decisions like who should win the Super Bowl and who should be our next president, etc., my wife made minor decisions like which house we had to buy and where our daughter should go to college.” :)
Now that we are clear on who does make minor decisions, let us move on to understanding why it is a good time to buy real estate in this market as I mentioned in my previous article. One of the best combinations that the market has to ever present is here: a depressed real estate market combined with the low mortgage rates. Due to this reason, we have seen a lot of buying activity in the past few months from smart buyers. Remember, the key to success in real estate, “You make money when you BUY and not when you sell.”
If you are a cash buyer in a high-end market which is $500,000 and above, you may not be getting the best deals people got during 2009–2011, but the market is still depressed by 5-15 percent, depending on different areas of Florida. Despite not many short sales and Real Estate Owned (REOs), there are still some good bargains in the market. However, majority of home buyers finance their primary home and right fully so. The interest rates are at the lowest ever recorded in the past 30 years. This one reason alone is why buying real estate in this market is still a great deal. Some of you who are in market for high-end properties still did not miss the boat because mortgage rates, which are at the lowest around 3.0-3.5 percent on a 30-year fixed loan. Let’s take a real world example from one of our recent sales in 2012. It was sold for $550,000 this year, but was sold for $505,000 during 2010 in a short sale transaction. So, the price went up by $45,000 or 8.0 percent since then. However the mortgage rates were around 4.50 percent in 2010 and are down to 3.50 percent at present. Let’s say after down payment, etc., if you were to get a loan for around $450,000, you will be paying around $95,000 less under current market conditions, while you may have paid 45,000 more. So, in the end you will be still getting ahead. On the other hand, if you are in the market for a house under $200,000, there is so much short sale/REO inventory in the market, which is still depressed, along with the great interest rates. So, the buyers in the low-end market are clear winners taking advantage of both the depressed prices and lowest interest rates of a lifetime.
Well now that we know why it is the best time to invest, let us understand the process involved in buying real estate in my next article.
Disclaimer: Every real estate deal is unique in its own right, despite many similarities discussed in these articles. Hence, the author strongly advises that the readers should seek professional help from a Licensed Real Estate Agent who is well versed with their area to handle their specific situation, and not apply these articles directly to their situation on their own. This article is purely for educational and entertainment purposes only.
Sam Vijay Matcha, Century 21 Beggins Enterprises, can be reached at (727) 515-9460 or e-mail [email protected]