Why is the current real estate market a buy now scenario for home buyers?
Two important reasons: Mortgage Interest Rates and Favorable Home Prices!
* Mortgage Interest Rates: Take a look at the 5 Year History of Average Mortgage Interest Rates! (Discussed in previous Blog post)
* Favorable Home Prices: So what has happened with real estate values in the same period?
Real estate is local. Real estate values vary from one neighborhood or section within a town, from town to town, county to county and state to state. There are so many factors that can affect real estate values, most of which can be read daily.
Needless to say, real estate values are substantially lower than previous years, and that is the reason why the current real estate market is a buy now scenario for all type of buyers and not just for first time buyers! The math is simple! The purchase price determines minimum down payment, which determines the amount of a mortgage required and then determines the amount of the mortgage payment.
As purchase prices drop, buyers benefit as minimum down payment requirements are less, the amount needed for a mortgage is less and the monthly mortgage payment is less, whether looking to buy a home a home in Iselin, New Jersey, Colonia, Edison, Middlesex County or any other State.
Here is a look at closed sale residential one family statistics in Middlesex County, as obtained from the Middlesex County Multiple Listing System as of July 24, 2010. Statistics are provided through 2006 as the MLS saves 5 years of data and previous available reports did not include calculations for only Mddlesex County.
So what are the benefits to home buyers? A $64,000 drop in average sale prices from 2006 in Middlesex County is an approximate savings of $320.00 in a monthly mortgage payment. Not only are buyers purchasing homes at substantially lower prices than in previous years, but they are able to obtain mortgage interest rates that are substantially lower than in previous years, and that equals more savings!
Will prices drop further? They may or they may not. The more immediate concern should be will mortgage interest rates rise, when and by how much. A thorough understanding of the impact of mortgage interest rates is also important. (Discussed in previous Blog post)
Regardless of where the home search is or what town a home is located in, obtaining reliable market value information is important! Information like this can be provided by your local REALTOR. Home buyers and home sellers are always asking for this type information.
My immediate market area is Northern Middlesex County and here are the links to the average sale prices since 2002 for some of the towns I list, show or sell homes in every day.