12/13/2019
BUYING A HOUSE AT THE END OF 2019
The only problem with buying now is that prices are the highest they have ever been. We should be close (if not already begun) to a downward turn of the housing cycle, which historically has been approximately every 3-5 years, but the last few cycles have been longer. This good upward cycle has been going strong since 2012, but Santa Clara, Santa Cruz, and to a lesser degree, San Benito Counties, have taken a slight downward turn in 2019. Right now, the Santa Clara County market is labeled “cold,” and the San Benito and Santa Cruz County markets are designated “cool.” A seller who needs to get out of their house quickly may consider an offer at a lower than asking price than their listing price. If you are not in a hurry yet want to test out lower offers, then you may find a charming home for a lower than asking the price and a super-low interest rate.
Right now is undoubtedly the best time to use leveraged money as interest rates are at a meager price for using someone else’s money. Currently, according to Bankrate.com, 3.68% is the average rate for a 30-year fixed-rate for a conforming mortgage loan in California. The 15-year fixed-rate average is quite a bit better at 3.14% (Or pi!) Those are the lowest rates since 2012. The 15-year rate is better than a half a point less than the 30-year loan rate, and that can make a difference in the amount of interest you pay over the life of the loan. Those percentages are for fixed-rate loans, which means that your mortgage payment if you don’t include your taxes and insurance into that payment, will be the same every month for 15 or 30-years. Of course, a loan taken out for 15-years will be a higher payment, but not double, than that of a 30-year loan, so if you can stretch your budget to manage it, then you could have no monthly mortgage payment in just 15 years. For many people coincides with higher costs in their budget like children going to college, taking care of elderly parents, saving more and fully funding their retirement, purchasing a vacation home, or other variations. Just the idea of being out from under a mortgage payment makes many of us giddy with imagining the freedom. The percentages on interest vary from week to week and may be higher or lower depending on several factors in your mortgage loan application, including your credit score. Also, there are variable rates, including the 5/1 adjustable-rate mortgage (ARM), that the average is at 3.52%. Historically these are just super rates for a mortgage loan.
No one wants to buy at the peak of the market and sell when the market drops. Yet the Bay Area markets have cooled to such a degree that a good deal may be had right now, especially considering the low-interest rates at this time. Once you locate the home you want to buy, ask your REALTOR® if you can make an offer for 3%, 5%, or even 10% less than the asking price. Who knows when a seller may want a quick sale before prices drop even more and be willing to work with you on price. There may be concessions given by both sides of the transaction, and don’t be afraid to make as many counter-offers as necessary to reach a meeting of the minds.
As a final note to leave with you, housing experts are saying that the end of 2020 or at least 2021 should be a buyer’s market again. So hold tight or negotiate a deal that both parties to the transaction can be satisfied.
~ Joan 12/13/19
