The answer to this question is similar to the answer to the question “when is the best time to plant a tree?”
The best time to plant a tree was 20 years ago.
The best time to buy a house was in 2012 when interest rates were *3.66% and the median home price in the Baltimore Metro Area was *$230,000.
The real question is… Is now a good time to buy a home?
THE ANSWER IS YES!
Let me explain why NOW is the time to purchase. We will look at the numbers we know from 2017 and 2018 and then we will look at a prediction for the future.
So here is a scenario. It is late 2017 and you are contemplating a move. The median home price is $259,000 in the Baltimore Metro Area and, according to Freddie Mac, the average 30-year mortgage rate is 3.99%. At that point you decide to hold off and continue with the status quo.
But, in 2018, you decide to make the move.
HOW MUCH DID DELAYING THAT DECISION FOR JUST 1 YEAR COST YOU?
$119.10 PER MONTH
What caused that payment to go up? During the year of waiting, the median home price in the Baltimore Metro Area rose 2.70% to $266,000 and the average interest rate rose to 4.54%. A combination of the market appreciation and the rise in interest rates forced the monthly payment up. Breaking it down further, the rise in the interest rate alone cost $84.00/month and the market appreciation cost the balance of $35/month.
Unfortunately, that $119/month doesn’t go away anytime soon. Over a five-year period that delay is going to cost you $7,145.90. WOW!
WHAT IS GOING TO HAPPEN IN 2019?
The cost of money will continue to rise. With economic confidence high, the 10-year treasury bonds yields will continue to increase. According to Freddie Mac’s US Economic and Housing Marketing Outlook the average interest rate on a 30-year mortgage is intended to rise to 5.3%!HOLY MOLEY
The value of homes will go up. Since 1998, homes in the Baltimore Metro Area have increased in value at an annual average of 3.87%/year. Since the low point in 2011, homes values have increased by an average of 2.75%/year. Right now, the supply of homes is at a 10-year low. 1000’s of new listings would need to come on the market immediately to shift the market from a seller’s market to a buyer’s market.
The other hidden cost that we haven’t touched on yet is the loss of principal pay down on your mortgage , but I will save that is a story for another day.
So, what's the bottom line…
WAITING IS EXPENSIVE
If someone you know is considering "planting" themselves in a new home, please share this blog and my phone number with them.
Median Home Price in the Baltimore Metro according to MarketStats
2018 - 266000
2017 - 259000
2016 - 250000
Interest Rate according Freddie Mac
2016 - 3.65%
2017 - 3.99%
2018 - 4.54%
Author:Alexander Necker Phone: 410-920-4760 Dated: February 6th 2019 Views: 38 About Alexander: ...
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About Alexander Necker, Real Estate Sales Consultant
I specialize in selling the Baltimore Metropolitan’s Premier Homes.
I am an Eagle Scout. I mention this because the process of becoming an Eagle Scout provided me with the foundation by which I live my life. The values of trustworthiness, integrity, and helpfulness have allowed me to become the man I am today.
The words that describe me are:
Driver of my own professional destiny
C onduit for connecting people for professional development
Devoted husband with a wonderful wife
Father to 2 beautiful children with growing college funds
Student of Finance and Investments
After graduating college and starting a career in my field of study (agronomy), I quickly rose to the position of assistant and then superintendent of private golf courses. After 17 years in the golf business, I decided it was time to change to a career where I would not be at the mercy of the uncontrollable forces of sun, wind and rain. I chose a field where I would be the master of my fate, where the hard work and the long hours to which I am accustomed would be the determinant of my success.
The primary reason I am in the real estate business is to help people. A real estate transaction is one of the largest financial transactions you will ever undertake. Everyone deserves a real estate partner that understands and appreciates that fact. My focus on integrity, trust and communication are nothing less than I would want for myself, my family or friends entering into a large financial proceeding. I am committed to being the one real estate agent that keeps my client's best interests front and center.
In real estate, I consider myself to be a true professional in the same vein as the physician, the attorney and the accountant whom you must trust with the most important assets of your life. Nothing less is acceptable.
Alexander NeckerProudly Presents1406 Valbrook Court SBel Air MD 21015H
I appreciate all your assistance in selling my house. You made the process so easy and so quick.
When we first met and discussed the price, I had my mind made regarding the price. After you reviewed the current market with me, I took your advice and listed it for $20,000 less than I originally thought and I am glad we did. If we had listed at my price, we would still be trying to sell it. Instead, it was under contract in 14 days with three offers. Having multiple offers was a great feeling!!!
I also wanted to let you how impressed I was with your communication. I always knew what was going on with the inspections and the buyer. Our weekly and sometimes daily phone conversations really made me feel comfortable that there weren't going to be any problems with the settlement.