Wednesday, March 10, 2010

The question is when the first-time buyers will say YES! Some are moving quickly because of the tax credit, some because of a child on the way, or a lease renewal looms. But others continue to take their time, thinking there will be more houses to look at, lower prices. Well here’s the problem. While inventory won’t dwindle soon, and some prices affected by foreclosure pressure may still be bottoming, two factors dominate in support of a buy decision soon: These are attractive interest rates that may not last and the spector of inflation given the overall economic outlook, the deficit and the value of the dollar.

Why does inflation factor into this decision? According to Warren Buffett, the best way to fight inflation for the average consumer is to buy real estate with 20% down and a 30-year fixed rate mortgage. If we get rampant inflation and you don’t own a home, you will find your monthly rent obligations soaring. If you buy a home, your mortgage cost will remain the same as your salary increases resulting in more disposable income — which hopefully you’ll start saving so you’ll have a nest egg for maintenance, repairs and, of course, the down payment on a even grander home in a few years!

Few people actually buy at the very, very bottom. The fortunate buy during that dip, somewhere in the low valley, and do well through the recovery, even a slow one. So my cautious buyers, my recommendation is to sign a contract before May 1st. April 1st may be preferable, but let’s finish looking and decide! I’ve got time this weekend. How about you?


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