WHAT ABOUT BUYERS in 2013?

With this market favoring sellers (see the 2012 Average Sales Price by City compared to 2011 below), it can be discouraging for buyers.  Some buyers are tired of competing against 4, 5 or 14 other offers on a single property.  They are also nervous about the risk of coming up with additional monies to deal with appraisal issues if they are luck enough to be the winning bid.

 

With buyers that I have represented, be it in the hot sellers market of 2004 through 2008, 2012 or buyers in 2013, I tell them the same thing.  “BE PATIENT AND STICK WITH IT – I’LL FIND YOU A HOME.  The reason buyers need to be persistent is simple.  Buying in today’s market will enable them to gain WEALTH in Real Estate, even if there is little to no appreciation on the homes they buy. 

 

The News Media has been saying for the last several months that the Real Estate Market had finally “bottomed out” in the Bay Area. It is expected that Mortgage Interest Rates will be EXCELLENT” during (at least) the first half of 2013 and Really Good for all of 2013.  Conforming loans of $417K or less are around 3.5%.  Also, Residential Rents increased 10% or more during 2012 in most all Bay Area cities.  The cost of owning a home is frequently equal or less than rent.

 

Building Wealth in Today’s Real Estate Market.  The reason buyers should “be patient and stick with it” is again, simple.  I’ve already discussed how INCREDIBLE Mortgage Interest Rates are. When mortgage rates are between 3 and 4%, new homeowners will pay off the principal 3 TIMES FASTER than when rates go back 6 to7% consistent with a “normal economy”.  When homeowners have a mortgage at 3 to 4%, 27% of their payments each year will go towards principal reduction for the first several years.  When mortgage interest rates are 6 to 7%, 9% of their payments each year will go towards principal reduction for the first several years.  Buyer’s who are “patient and stick with it” and buy a home in 2013 will be building WEALTH at an incredible pace, even if homes appreciate very slowly or not at all (which was not the case in 2012 – see below).

 

So, find yourself an experienced Realtor® and keep writing offers until you’re a homeowner.

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