Time to Buy!

Timing is everything! A few weeks ago on a Friday, we were blessed with a foot of fresh snow at Ski Santa Fe. The bummer was that the ski area had closed two weeks prior, so to take advantage of this "gift," you had to hike up the mountain on your own. Not an easy task considering the elevation starts around 9,500' above sea level up to over 12,000'!

On Saturday, the weather cleared with lots of sun and just a little bit of wind. The conditions were perfect. Waiting another day would turn the light, fresh powder into mush which wouldn't be worth skiing. I seized the opportunity and had a blast, not to mention a great workout.

Our current real estate market conditions are somewhat the same. Timing is everything. The upside today is that home prices have come down and interest rates are ridiculously low. But there's a downside looming around the corner--inflation. The current administration is spending so much money that inflation is inevitable. Your hard earned dollar will have less buying power with inflation.

So what does inflation do for the real estate market? My research indicates that one way inflation will affect the real estate market is by causing interest rates to go up. Some estimates indicate that by the end of the year, we'll be looking at 6.75% on a 30-year fixed mortgage (non-jumbo). Today, they're around 4.75%. So what will a 2% shift cost you? Well, on a $400,000 mortgage, that 2% difference will cost you more than $500 more per month! Here's a link to a great article with more details.

Talk about less buying power! That same mortgage payment on $400,000 at 4.75% is equal to, more or less, about a $320,000 mortgage at 6.75%, so you just lost $80,000 of buying power. Not my idea of a good deal!

The time is NOW not only to acquire real estate at a low price, but also to get the most out of your money with a fixed mortgage at a low interest rate. Carpe Dinero!