WHY SHOULD I BUY NOW?
Interest rates for conforming 30-year fixed-rate mortgages have been hovering
near 6% so far in 2008.  These rates are basically as low as have ever been seen,
and well below historical norms.  Home prices are lower than they have been in
several years and bargains abound.  The market has begun to show signs of
stabilization now so I don’t expect to see much more in terms of price
reductions.  But I do expect to see interest rates rise over the next year or two.

When you say: “How's the market?  Why Should I buy today?  I want to buy at the
bottom of the market.  I'm going to wait for prices to go down more...”

Here is what I say:  "Don't wait and try to time the exact bottom of the market.  We
cannot predict where that bottom is, and only know it was reached once prices
start to rise.  Investors much smarter than me have always said 'You buy on the
way down' and 'Sell on the way up' to minimize cost and maximize profit.  Right
now is a great time to buy.  Since inventories are high, not only do you have a lot
of homes to choose from, it also creates more competition among sellers.  That's
great news for a buyer or investor looking for a good deal. And to top it off
interest rates for 30-year fixed-rate mortgages are lower than they have been in
several years! That means more buying power, more house, and/or lower
payments".  There's an old saying in real estate: You make your money when you
buy, not when you sell.  

Based on the chart at the bottom of this page (showing average interest rates
since 1971) it looks like a reasonable expectation for future interest rates would be
in the 8% - 9% range.  Your purchasing power at today's rates is significantly
higher than it will be when rates rise to a more "normal" level.

Did you know the monthly payment of a $200,000 home at 6% is almost identical
to a $180,000 home at 7%?  The 10% savings in price is essentially wiped out by a
1% increase in interest rate.  A good and true 'rule of thumb' is that a 1% change
in intrest rates decreases your purchasing power by 10%.

Here is a table that shows the impact of a 10% drop in purchase price at various
interest rates, based on a 30-year fixed-rate loan with 10% down (monthly
payment of principal & interest):
Price                6.00%                6.50%             7.00%             7.50%               8.00%
$375,000        $2,023.48        $2,133.23        $2,245.40        $2,359.85        $2,476.46
$338,000        $1,823.83        $1,922.75        $2,023.85        $2,127.01        $2,232.11
$304,000        $1,640.37        $1,729.34        $1,820.27        $1,913.05        $2,007.58
$274,000        $1,478.49        $1,558.68        $1,640.64        $1,724.26        $1,809.46
$247,000        $1,332.80        $1,405.09        $1,478.97        $1,554.35        $1,631.16
$222,000        $1,197.90        $1,262.87        $1,329.27        $1,397.03        $1,466.06
$200,000        $1,079.19        $1,137.72        $1,197.54        $1,258.59        $1,320.78
$180,000        $   971.27        $1,023.95        $1,077.79        $1,132.73        $1,188.70
$162,000        $   874.14        $   921.56        $   970.01        $1,019.45        $1,069.83
$146,000        $   787.81        $   830.54        $   874.21        $   918.77        $   964.17
John R. Hastings      Associate Broker Licensed in Arizona
Why should I buy today ? ?
CURRENT MORTGAGE INTEREST RATES
Primary Mortgage Market Survey® data provided by Freddie Mac
Data is updated weekly (usually on Thursdays)