The Price of Real Estate vs. The Price of Money
June 24, 2008
When it comes to buying a home or investing in real estate, there are two matters to always consider.
The price of Real Estate versus the price of money.
In the last several weeks, interest rates and long-term mortgage rates have risen considerably. 30-year Fixed mortgage rates have risen from below the 6% level a few weeks ago to nearly 6.3% this past week.
On Wednesday, the Federal Reserve Board will announce interest rate policy and whether or not they will cut (or raise) interest rates.
Wall Street thinks the FED is done cutting rates for the time being as a result of inflation fears. In fact, “some economists believe the Fed will begin raising rates as soon as this summer” while “others believe that rate hikes are more likely in early 2009.”
why is this important when it comes to buying real estate?
On one hand, as Lewis Corcoran, a very talented mortgage broker points out , “We can never expect people to buy homes simply because, as the National Association of Realtors keeps saying and has been saying for 2 years now: “now is a great time to buy a home.” as we do not know for sure when and where the bottom will be found.
However, one must also take into consideration that if the experts are correct and interest rates do continue to rise trough summer and into 2009, then, …
No matter how you cut it, even if home price remain level or even decline slightly, the actual cost of the home is rising. (Please see Home Prices down Price you pay is Up)
Again, how you finance your home can be as important as the price you pay. The price of money is steadily rising. If we have hit a bottom in real estate prices, then the cost of your home is going up. Period!
If you are in the market to buy and believe that the market has neared a bottom in Phoenix or Scottsdale or Fountain Hills or any town in your area; If you find a home that is a good value for you and your family that offers you a place to live, favorable tax treatment and you can lock in an affordable 30-year or 15 year fixed monthly mortgage payment , then consider making an offer on that home you have been watching.
Again, every situation is different, so please speak with mortgage and real estate professional to help evaluate whether now is the right time to buy.
Below please find experts who can help.
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Denver - Wade Young
- Houston - Michael Price
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Orlando - Hojin Chang
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Sacramento - Gene Riede
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San Diego - Kim Schmidt
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Copyright © 2008 By James Wexler, All Rights Reserved. *The Price of Real Estate vs. The Price of Money*
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs
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Thanks for the mention