2015 Buyers Consideration – 9 Reasons Why ‘Waiting To Buy’ Costs You More
Buyers are used to the idea of hanging around and waiting for prices to go lower. As a matter of fact, most buyers have been waiting for so long, that they’ve developed a new habit of “Not Buying”. Let’s look at why waiting to buy is not a great idea – especially now:
- Interest Rates are still at near historical lows and at some point will rise – If you wait, you can wind up paying $60.00 more for every $1,000.00 you finance; for every 1% in interest rate increase. If you really want to pay your bank more, by all means, Mr. and Mrs. Buyer please keep waiting.
- Rental Rates are increasing – As rental properties are gobbled up, rents are raised By the time most tenants realize they’re throwing their money away, they will have to spend a lot more on real estate. Also, as rental rates increase, property becomes a better investment and the pool of Buyers expands. Besides, everyone knows the great sense of pride we have when we can tell people “I’m a tenant”. Who wants to lose that? Besides, isn’t it almost as much fun to give the money to a greedy landlord as it is to give it to the bank?
- The best way to lose money and opportunity is to “follow the crowd”– Why buy now when you can wait until the best-priced and most desirable properties are all gone? Do you really want someone’s “left-overs”?
- Supply has stabilized or is going down – In many neighborhoods, we have already seen a significant reduction in the number of homes available for sale. This drop in inventory foreshadows what will happen in the rest of the market. Think about how much fun it will be to complain for the next 10 years about what you missed out on!
- Demand has increased significantly for all price points – As “Pent-Up” Buyer Demand is released and all those buyers re-enter the market, competition will become fierce. Imagine how much fun it will soon be to fight with all of these buyers! If you just wait a little longer you can have more fun than you could at a carnival!
- Price per square foot is increasing– Recent trends indicate that the price per square foot is going up. If you can just hold out a little longer, you’ll finally be able to get rid of all that extra cash that’s been lying around. (Yay!)
- The New Construction or Replacement Cost vs. Existing Home Yield Curve has never been greater – The best way to determine whether you’re getting a “deal” in Real Estate is to look at the difference in price between the purchase price of an existing home versus the cost to replace the home. For example, if you can buy your home for $75.00 per square foot including the lot, and the cost to build the same home in a similar neighborhood is $200.00, the yield would be $125.00. The economy is improving and contractors are building homes again, so prices are guaranteed to increase. Buyers are likely to get significant appreciation benefit from the difference or yield curve. So, who wants to make money?
- The Economy is improving– Most important economic indicators are showing signs that the economy is either leveling off or improving. These include drops in unemployment, strong corporate earnings, and increased manufacturing. Once again, if we can just wait a little longer…we can get less and pay a lot more!
- Owning a home is the Great American Dream– Many experts have implied that there is a paradigm shift in the way people view owning real estate and it will be less important to people to actually own their own home. These experts completely overlook human motivation. For centuries and even millennia, human beings have been willing to kill each other and destroy entire civilizations for little patches of land. The American Dream will always be to “want” things, especially a home. But, then again who wants to achieve a dream? After all, isn’t happiness over-rated?
This could be the best opportunity we’ve ever had, or ever will have, to realize our dreams and secure our future happiness. The time is now! Stop waiting!