Question: Why should I buy a house now when home prices may drop in the future?

This is a great question. The media have generated so many stories about the “declining” real estate market that some consumers are concerned about buying real estate. Despite what you’ve read in the newspaper or heard on the national news, there are many reasons to buy a house now rather than later.

1. Who knows what the future holds? No one can predict with certainty whether prices will fall, remain steady, or rise. In many markets, the inventory is up with properties on the market for longer periods of time, but the prices are still not decreasing to the degree predicted by some analysts.
2. When you buy a home you get to build ownership in a property. If you’re paying rent, all that money goes into someone else’s pocket, instead of equity in a property you own.
3. Interest rates are relatively low right now – you may not want to risk a rise in interest rates. Did you know that for every point the interest rate increases, you have to buy 9% less house to keep your payment the same? For example, if you were to borrow $600,000* at 6.25%, your monthly payment would be $3694. If you borrow at 7.25% your payment would increase to $4093. At 7.25% you would have to purchase a house for $58,500 less than at 6.25%. Do you want to settle for a cheaper house? Or the house you really want?
4. With a professional real estate agent who understands then negotiation process, you can get great deals – perhaps significantly below the asking price. This is especially true when your offer is the only one on the table.

So don’t wait for the real estate bubble to burst – that time may have already passed. If you’ve been thinking about buying, NOW may be the right time.

*For a $750,000 priced home with 20% down.