Waiting to Buy Can Cost You Money
I'm just gonna wait until home prices go down. This is one of the most common things Aldo hears from clients on a daily. I'm gonna wait until the market goes down or home prices drop. Today Aldo is going to share why waiting can cost you money and some good deals.
You want the best deal possible whether that's on your house, your interest rate, closing costs, whatever it can be, but Aldo wants to share with you some dynamics and some data that actually shows why we may not be having homes decrease 8%, 10%, or 20% like it did back in 2008.
Some factors right now are months of inventory and interest rates. Right now, we're seeing about 2, to 2.5 months of inventory for those of you who don't know. If we were to stop listing any houses right now in our market, it would take us about 2 to 2.5 months for us to run out of all of our listings. So it's pretty small compared to historical months of inventory.
Now for us to see an actual balanced market or moving more into a buyer's market from the seller's market that we in right now, we would need to be closer to 6, or even 7 months of inventory. That's more of a balanced market. Now, we don't know how long it's gonna take for us to be there. It's been about almost 4 years since we've been anywhere above 3 months of inventory, so we're moving back that way but it still can take a couple of years.
Now the second thing that is holding the market really strong right now are interest rates. About 8 months ago or so, the average house was $400k. The average interest rate was around 4.5% or 4.75%. Now, right now in the Fall, the average house has climbed up more to about $430k, $440k or so. But interest rates are now hovering between 3.75% and 3.95%. So, 8 months ago if you were to buy a house at $400k, your principal interest would've been about $1,650, so $1,650 a month.
Today, even though the prices of the homes are actually 10% more than they were, interest rates are about 1% more. So you would actually have the exact same mortgage payment of $1,650. I just want everybody to see the big picture. I wouldn't worry so much about home prices right now with interest rates being so low because you're gonna be paying less.