Now Is The Time

I spoke to a new client the other day about whether or not it was the “right time” to buy real estate. He was concerned because of how high the home prices have reached, and he was worried that after he bought, the real estate market would crash like his dot-com stocks had. As he said, he only needed one of those meltdowns in his life! I couldn’t agree more. The difference between real estate and the dot coms is that there were new stock offerings every other day for companies that had no profits and were driven solely by speculation. In real estate, there is not anyone making any more land, and getting a new home built in Santa Cruz county can sometimes seem like a life-altering experience. Combine the lack of raw ground, the tedious permit process, our fantastic climate and the continuing increase in population, and, in my opinion, you have a recipe for making real estate price appreciation a given.

Unfortunately, getting your foot in the door for the first time can be a very real problem. However there are several factors that bring together the “perfect storm” for that first time buyer. The very first is the lack of homes for sale. This isn’t too much of a surprise, as current homeowners have refinanced their homes to monthly payment levels that they find very comfortable so they don’t want to sell. The next deals with the refinance market: those that can, have. In other words, interest rates have been down low enough for long enough that the refinance market is pretty much dried up for most of the lenders. Both of these factors have really cut the volume for the mortgage business. Now those lenders that would have never considered making a loan for 100% financing (no money down), taking a borrower with some credit lates, or making a loan and allowing “interest only payments” are now introducing these programs and more. All of this is an effort to get their mortgage business moving. The lenders are ready to deal.

So if you, or someone you know, are sitting on the fence, tell them that now are the time.

Fixed Interest Rates for Conforming Loan Amounts ($359,650) as of 1/21/05 (a.m.) are:
(rates quoted are for 0 point loans)

30 year fixed: 5.5% (APR 5.58%) payments are $2,042.05/mo.
15 year fixed: 5.0% (APR 5.14%) payments are $2,844.09/mo.