And that time was right after 9-11. The world was shocked and the stock market took a dive, consequently dropping interest rates to an all time historic low. That in turn helped fuel a housing boom and price appreciation that will be remembered forever.
I'm watching the news and seeing that the worldwide markets took a dive today, meaning that Wall Street will in turn take a dive again tomorrow morning (after dropping an historic 8% in just the first 3 weeks of the year.) Bad news for the stock market is always good news for interest rates. We are in an interesting point in time where history could repeat itself. As recently as last JULY 2007, we had interest rates topping 7%. Now the averages are in the 5.5% range. Will they go lower? How low can they go? Who knows?
So what lessons can we apply from the past to today?
Number one, don't even think you can time the bottom. Can you time an interest rate bottom? No better than you can guess the Powerball numbers! Last time interest rates bottomed out at 5% for all of about 1 week. And most people just thought they would just go lower (its human nature.) It didn't happen. What you should be doing right now is have a clear line of communication with a lender! That might mean talking to them every day. That might mean that you might want to make a call on locking in an interest rate soon. Keep watching it closely. DO NOT sit and sit and wait and wait and keep thinking rates will keep going lower. You can try to time the low, but you will never know when it is there. When it feels right lock it in!
Number two, if you are lucky enough to be buying right now, and you have been watching prices slowly drop, and are waiting to see the prices drop further because of the looming recession, then you might be in for a big dissapointment. You will probably not get your cake and eat it too (low interest rates AND a steal of a price on a home.)
A. Colorado is not in bad shape compared to most of the country, because our valuse haven't tripled in the last 3 years.
B. There is a cetain % of the market that simply CAN'T drop their prices much...they simply don't have the equity to work with. And, as interest rates drop, more buyers come off of the sidelines and buy too, thus creating more demand and stopping or severly slowing the price declines. Investors are bound to come back into the picture to take advantage of the low rates, fueling more demand. The supply and demand equation will become more balanced, and could even make prices RISE AGAIN! That house you have been watching and watching and waiting to drop their price even more just might be gone one morning when you wake up. Then you may have to see 30 more houses to find one that you like as much. Recession or no recession, people will buy homes to take advantage of the low rates.
Its first come, first served in Real Estate. Think about taking some action!
For more real estate insights, go to http://www.coloradodreamhomes.net/
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