Should we wait until next year to buy? I am asked this question time and time again by potential buyers and I am constantly searching for the best answer to this complex question.
Sure…It’s a buyer’s market right now, prices have fallen greatly over the last year, but have they hit rock bottom or should buyers wait it out for even better deals? For those first-time home buyers asking this question, there is more than one reason to seriously consider buying now:
1. It’s a buyers market. But what does that really mean? There is a lot of inventory on the market, and sellers are now, more than ever, willing to NEGOTIATE on what price they will accept for their home. Buyers are looking for “deals” and if one particular seller is not willing to bargain, they can find another seller who is.
2. Will prices continue to fall? For properties that are not priced correctly, prices will definitely continue to fall. On the other hand, for listings that are priced accurately, this is not the case. According to statistics from the FAR, Florida Association of Realtors, all indicators point to the fact that on average prices have reached their lowest point. Many sellers are priced at or below what they paid for their properties and they simply cannot go any lower. In many situations, sellers know that a $10-20,000 price reduction could bring them a contract for their property but this is simply not an option for many. In the meantime, many sellers are having better luck renting their properties. Of course everyone would love to sell their property right away, but renting it now can provide some well needed income for desperate sellers.
3. Interest rates are at a 40 year low- NOW is the time to lock in your rate. This is a unique situation that will not last forever. Historically, interest rates have always gone up following presidential elections. What does this mean for your buyers? Let’s say the interest rates go up 1 point from this year until next. For buyers mortgaging a $200,000 home, this increase would equate to an increase of $200 each month in their mortgage payment. This is a steep increase for first-time home buyers that are already on a tight budget.
4. Tax Benefits. Many renters do not realize all of the benefits to owning a home. Among the many advantages, tax deductions are at the top of the list. All interest that you pay on your mortgage and all real estate tax that you pay for your property is tax deductible. Additionally, a property tax reform of some sort will “almost definitely” pass this legislative session, according to officials of FAR, and this will provide some needed tax relief for Florida property owners.