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2019 Idaho Real Estate Blog

Why You Should By A Home This Year Main Boise Home Loans
Waiting for the bottom line in the housing market could be a mistake. Read on to see why.

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Dear BuildingCredibility.com reader:

Why would anyone want to buy a house these days? You know the price is only going to go down, right? It is predicted that the average American home is expected to be 10% cheaper at this time next year. The obvious thing to do would be to wait and buy next year...right? Well, it may be the obvious thing, but possibly not the only SMART thing to consider.

There are two reason why buying a home now instead of waiting until next year could turn out to be a good idea:

FORECASTS AND PREDICTIONS ARE JUST FORECASTS AND PREDICTIONS

The rebound in home prices is sure to come, but it will more than likely come when we least expect it. The housing market is in uncharted waters, and forecasting the end to the housing slump could prove to be next to impossible.

Right now, buyers are experiencing the best buyer's market in a long time. Many sellers are desperate, and mortgage rates are very low. Even if the price isn't as low as it may get by next year, you have the power to choose from a huge inventory and negotiate a great price at the same time. Chances are, if you purchase your home at 5-10% below comparable sales, you may be very near the bottom line anyway!

WHILE HOMES MAY STILL BE CHEAP NEXT YEAR, MORTGAGES MAY NOT BE

It is important to understand how mortgage rates are set (see my previous blog entries for more on this topic). Mortgage rates reflect expections about inflation, and there are many reasons to worry. If you have gassed up your car or purchased milk lately, you understand what I mean there. A 1% rise in mortgage rates between now and next year could net you as much as $25,000 LESS on the mortgage loan you may qualify for.

EXAMPLE:

A 6% mortgage with a $1,500 payment buys a $250,000 loan.
A 7% mortgage with a $1,500 payment only buys a $225,000 loan.

Far be it from me to consider myself the expert on forecasting this volatile market. But that is the point I wish to make...no one has that crystal ball. Underneath all the predictions and forecasts that may or may not come true, today's housing market offers an opportunity to find the house you want and demand the price that you can afford. After all, isn't that what buying a home should look like?

If you have additional questions about housing prices in the Boise area or a loan for a home in the Boise area, or would like to discuss this blog further, feel free to call or email me at (208) 880-0316 and eric@ericsloans.com. You can also visit my website at http://www.ericsloans.com.

Regards,

Eric Leigh, Mortgage Loan Officer
1419 N. Midland Boulevard
Nampa, ID 83651
(208) 880-0316
http://www.ericsloans.com
eric@ericsloans.com
 
Posted by Eric Leigh at 5/8/2008 3:16:00 PM
Comments (5)
Re:Why You Should By A Home This Year
Good post.

I would just wonder 'when is it not a good time to buy a home?' Never heard that line from anyone who makes a cut on the sale.

I would wait for inventory to bottom. That will mark stabilization...you will have a huge selection of houses and price should be near the bottom. Price bottoms in any industry are never found at supply peaks versus demand. Simply put our supply is increasing faster than demand and price will follow in simple economics.

As far as interest rates, you had super low rates in 2005 and 2006...hope you didnt buy then. IF interest rates rise significantly we will see huge price drops as loan resets crush homeowners and the market REO's spike. If you are fearful of 7% interest rates... I wouldn't be... I would LOVE IT to be a buyer if we had 10% interest rates...

...see 10% rates would put a knife into this already critical market. Prices would absolutely plunge (after all who is really left thats well qualified to purchase after this 0 down bonanza). I would buy a cheap home with low property taxes.

Wait for 3 months of flat to increasing inventory figures. Maybe it will be this summer, maybe next summer maybe... you will not regret it.
Posted by on 5/8/2008 9:45 AM
Re:Why You Should By A Home This Year
The only thing I would add is that if you bought a home in 2005 or 2006, you are only hurting right now if you're trying to sell it. I try to remind people that what happened to property values in 2005 and 2006 is definitely not normal...what goes up, must come down soon.

If you bought in 2005 or 2006, and you're in your home for an average of 5-7 years, chances are that it isn't quite as bad if your home dropped 10% of it's value...providing that you are in a mortgage that will not adjust up 3%-4% in only 2 years. Those are the people that are in trouble right now...major mortgage payment increases because of ARM resets. If you bought a home in 2005 and will be in it until 2011...probably not a problem!

What happened is that people lost sight of what kind of investment real estate is...LONG TERM!

Eric Leigh
Posted by Eric Leigh on 5/8/2008 10:54 AM
Re:Why You Should By A Home This Year
Eric-
People lost site because of greed (theirs and the industry)

Look at NARs comments that if you paid off your home you are basically an idiot...leverage away!!!

How many Boise loan officers wrote loans which the buyer could not qualify for at the non-teaser rate...my guess 90%. Financial products are not comprehensible to the average Joe, and the industry and loan officers conspired to over-leverage buyers with BS lines since they could sell the risk off to China/Pension funds etc... and keep a huge profit.

No, offense since I can't speak to your ethics, but personally would like to see a lot of unemployed LO, a few busted banks and a handfull of CEO's in jail.

THIS IS MY COUNTRY AND IT HAS BEEN DESTROYED, our currency is third world, our economy is in the toilet and our tax money is bailing out crooks! If I sound like a nay-sayer its because we had one of the biggest thefts in our history by the financial industry and it will be the honest businesses and taxpayers who suffer through high oil prices, tight credit, business failures and job losses.
Posted by on 5/9/2008 12:34 AM
Re:Why You Should By A Home This Year
Emdeplam,

I would love to see LO's leaving the industry as well...originators like me who educate their borrowers and do the right thing for people will thrive. Some of my practices that have best served my business are all related to educating my clients/prospects. I teach the credit scoring model, give weekly luncheons on how to pay off mortgages early, and market solely by adding value. It has been a formula for success for me.

I would love to speak with you one-on-one to get your personal take on some of your issues of concern you blog about. If you wish, please call me at (208) 880-0316. If not, then I'll look forward to your next blogs!

Eric
Posted by Eric Leigh on 5/9/2008 7:30 AM
Re:Why You Should By A Home This Year
No one can say that our market is normal or even perdictable. Right now no one knows what is going to happen. The thing that I know is that everything is on sale! Marked down, is it as low as we can go? That is the question. I think the other thing that we have to look at is margins. Buy low sell low, buy high sell high. Are you making any more or less money? Everyone wants to sell high and buy low and that is a very hard mark to hit. I was talking to a group of investment managers, they had a great point. Even if the market went down another 10% the forcasted interest rates, which are forcasted to go up, would still make your payment higher if you waited a year.

" The secert to success is to know something nobeody else knows." Aristotle Onassis

I agree with this, however it would be great if CNN or some of the other new programs would announce that this is the time to buy. As soon as it came out that the interest rates were good, we saw an increase in refinaces. People are just waiting for someone else to tell them it is a good time to buy. The "fence sitters" need a reason to jump. Most of the time you don't know the bottom has hit untill it starts to come back up.



Posted by on 5/15/2008 8:04 AM
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