The Hazards of Timing the Market
June 30, 2009
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Buyers who wait until prices come down are making a decision that requires luck in both the price of the home and the interest rate. Many buyers don’t understand that a 1 percent jump in interest rate nullifies a 10 percent drop in home prices.
Drop in Home Price Is Offset by Increase in Interest Rate | |||
Home Price | Starting Price $200,000 | 5% Drop $190,000 | 10% Drop $180,000 |
Interest Rate | Starting Rate 6.0% | .5% Jump 6.5% | 1% Jump 7.0% |
Payment | $1,199 | $1,201 | $1,198 |
Interest rates are near the best they’ve been in thirty-five years. Does this mean they’ll stay low? As with home price, no one knows if they’ll stay up or down until after the market reflects the change. The important thing to remember is that it’s a myth to think anyone can time the market. Smart buyers can make smart choices about when to buy though.
Have any Questions? Please call me!
Amy Ruiz
Keller Williams Realty
(619) 328-6648
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