Monday May 22, 2017
 

New Home Sales Higher

New home sales posted their biggest jump in nearly 20 years today, climbing to their highest level since 2008.

New home sales posted their biggest jump in nearly 20 years today, climbing to their highest level since 2008. Sales climbed more than 15% in January versus the previous month.

The market was surprised by an unexpected jump in home sales when it should have been no surprise at all since the stock market always seems to be behind the curve.

With interest rates expected to skyrocket later this year, but currently still at some of the lowest rates in history, it makes complete sense that we're going to see huge home sale numbers through the beginning of this year as more homeowners see inflation and interest rate jumps later this year.

Through mid-2013 homebuyers' have a choice –

  1. Purchase a house for a higher price, but very low interest rates (3.5%) for 30 years or
  2. Purchase a house for 10% to 15% less next year, but you pay 5%-6% interest for 30 years

The choice seems pretty easy, if you're going to be a homeowner and you plan on staying in your house for many years then you certainly should purchase your home now to lock in the lower interest rate.

I understand you may be apprehensive about purchasing into a market that's still looks to be on its way down, but at this point the pros to purchasing now definitely outweigh the cons.

A recent report states it's now a sellers’ market and although the number of homes for sale has fallen, do not let the media fool you it's still a buyers’ market. There are still far too many foreclosures coming down the line for anyone to state it's a sellers’ market and investor money is starting to waver as prices have continued to fall and profits have continued to shrink in many markets.

For example -

  1. Purchase a home at 324 Telegraph Rd. today for $200,000 and your principal and interest payment would be $898.09 at 3.5% for 30 years
  2. Purchase a home at 324 Telegraph Rd. later this year for $180,000 and your principal and interest payment would be $1022.02 at 5.5% for 30 years
  3. Purchase a home a 324 Telegraph Rd. mid – 2014 for $170,000 and your principal and interest payment would be $1131.01 at 7% for 30 years

As you can see there's really only one choice and homebuyers are smart enough to recognize this, which is the reason home sales numbers skyrocketed in January 2013.

Through mid-2013 continue to look for very marginal increases some markets as intelligent home-buyers pick up their houses now before interest rates go up and the “cost” of the house increases whether or not the price of the house decreases.

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