Real Estate Prices at 2003 Levels – Don’t Miss an Opportunity!
March 17, 2011
Barbara Corcoran and I are partners in a real estate network for selected brokers throughout the country. We are sending this memo to our membership. I thought it so important and interesting that I wanted to share this information. Take a look at this chart from Zillow showing mortgage rates for the last 30 years.
Most people have forgotten that mortgage rates were actually between 10% and 16% for a twelve year period (1979-1991). Because we hear so often about how low the mortgage rates are, what a great time to buy a house etc. the impact of today’s incredible opportunity is sometimes lost on a lot of us.
Think about it, we are seeing local real estate prices probably at 2003 levels, there is a tremendous selection of good homes available and unbelievable mortgage rates!
For those who are thinking that the prices might still drop, they might be right (we personally don’t think so). Even if they drop another 1% or 2%, that’s nothing compared to the amount of money you can save on a TEMPORARILY available low interest mortgage. A drop of 2% in the price of a $500,000 house is $10,000 and the same 2% on a $1,000,000 house is $20,000. Wait until you see what the dollars look like on your mortgage savings!
There is also another unique aspect to our situation today in the real estate market. Usually there is a balancing act, do I sell my house first and hope that I can find a great house without compromising or do I just find the house and then sell my old home hoping that I don’t have to carry both. What’s so special now is that you can sell your house first, and not worry. You probably will never get a better selection than what is available at the present time. If you can’t find a “dream house” now, you never will. An additional bonus is that if you are buying a more expensive house now than you are selling, you could receive a great immediate financial windfall on that transaction. This almost never happens! Take less for your house than you think its worth (in the “old days” pre-crash). Buy a more expensive house now, take what you consider a “hit” on your less expensive home and more than make up for it and then some (possibly quite a lot!) on the bigger house (“lose $100,000, make $200,000”). It’s been decades since such an incredible real estate opportunity existed!
There is a good argument that rates will be going up fairly soon and if you look at the chart 10% or more is not unusual (1979-1991). Even more frightening, the 10% plus rates lasted 12 years in a row. Who’s to say that can’t or won’t happen again. Would you still buy if that were the case? The window of opportunity is closing, very soon.
We’re bullish on America and on the real estate market. If you want to wait, that’s your choice. However, the opportunities may lessen and become more costly every month. The irony is even though the times seem to be challenging, the opportunities are perfect for the conservative buyer. The odds of making a successful investment have never been greater than they are at the present time.