South Florida home buyers, now is the TIME to buy…do the math!!!
We are aware of all the investors scooping up properties in 2003, ’04 and even into ’05 with the intention of flipping them, in order to realize a huge profit. The dilemma they were faced with was one of timing. How long should they hold onto the properties in order to maximize their profits? Some people were fortunate enough to get out in time, take their money and run to the bank. Many, however, missed the window of opportunity by trying too hard to time their sales just right, and consequently were later forced to either short sell their properties or face foreclosure.
Now we are experiencing a similar situation….only opposite. Instead of wondering how high the property will go, buyers are now speculating how low it will still drop. The attempt to time their purchases perfectly is just as risky for today’s buyers as it was for the investors in the old market. For soooo many reasons, if ever there was a perfect time to buy, it is now and here’s why.
First of all, money is cheap! Interest rates are at an all-time low and they’re not going to stay there forever. Did you realize, for every percentage point the interest rates rise, you, as a buyer, lose 10% of your buying power!
Studies suggest many areas of Florida have already hit bottom and the prediction for those that haven’t is, perhaps, an additional 5% drop…10 percent, at the most.
Let’s do the math. If you are buying in an area that may drop another 5% in the next year, but in the same timeframe, the interest rates climb 1%, how will you make out? The house you buy will be 5% cheaper but you may no longer qualify for it because you have lost 10% of your buyer power, due to the higher interest rate. Even if the property drops an additional 10%, if the interest rates go up 1%, you can only afford to buy the same house you’re looking at today. In the mean time, the home you’re living in now has also dropped 10%, so you will realize less money on your sale. You may be renting for the entire year, waiting for rock bottom prices, but again, you will gain nothing. You’ll have less buying power, so all that rent money will be wasted.
Think about it….this is not calculus–it’s simple math…houses are cheap…money is cheap…The time to buy is NOW!!!