I have been working on a newspaper column for the Denver Post and I am uncovering some critical information that I thought I should pass on to my home buyers NOW before the column comes out. I think the column will be entitled “The Train is Leaving the Station.” There are too many signs right now that buyers are ready to jump into the market and start buying quickly.
1. Cash buyers are coming in to the market quickly and buying big junks of properties. Please read the story I have attached below from the Wall Street Journal from Tuesday.
2. Yield on 10 year Treasury has increased substantially in last two weeks indicating an increase in mortgage rates. Mortgage Back Securities are telling a similar story. Rates are creeping up and staying under the radar and most people don’t even recognize they are rising. We were hovering around the high 4’s to 5% for interest rates just back in December. Now we are at 5.25 to 5.5. I think it’s very conceivable we could be at 6% by the end of summer. If interest rates get to 6% by the end of summer this will NEGATE ANY BIG DISCOUNT YOU GOT ON THE PRICE OF THE HOUSE. I know we all want to wait for prices to drop further, but you need to weigh that against interest rates if you are getting a loan.
3. Inventory is at a high but likely to decrease. APRIL 1 STARTS THE BUYING SEASON.
4. Congress is substantially limiting Fannie and Freddie which will likely decrease mortgage funds and increase rates.
In summary MOST people miss the train and buy too late. I would say 95% of people don’t get this equation correct. A great is example is “How many of you invested in the stock market at the all-time low of March 2009. Were you able to time the market?” If the answer is “no I did not”, don’t worry most people (95%) didn’t invest then either. You need to hit it at just the right time of low price and low interest. By the time you realize interest rates are rising and not coming down you are too late. Like Warren Buffet and other great investors do “they buy when there is chaos” Don’t buy when things settle down it will be too late”. “Unpredictability” in this case is a good thing so use it to your advantage.
Call me with questions.
Fuller Sotheby’s International Realty