What If?
As most of you know, my husband and I purchased our home about two months ago in April. We actually didn’t mean to purchase a home that early. Our original plan was to get married in January, go on our honeymoon in May, then start looking for a home in June. But in February we got teased by the declining prices and decided to jump the gun on our home purchase. By April we found and purchased our current home. At that time we heard all sorts of opinions on the timing of our purchase. “Buy now…it’s a buyer’s market.” “Wait a little longer…prices are still falling.” Yadi Yada. After 2 months, we sometimes wonder “WHAT IF we had waited another two months like we originally planned?” With home prices continuing to drop, would we have gotten a better deal now? That is hard to say. But both my husband and I are very happy with our decision to buy at the time we did and here is why.

The real estate bubble started to burst last August. By April of this year the market had already accumulated a large inventory of unsold homes. With that, prices had already gone down significantly. It’s true prices are still falling as we speak, but how much speculating can one do? We are not property flippers looking for the best deal. Like many middle class workers out there, we’re merely normal citizens who were bitterly priced out of the real estate market since the early 2000s but finally saw a glimmer of hope as the market waned. By April, prices were finally affordable enough for us to consider paying mortgages, property taxes, and whatever expenses that may come with homeownership.

Since the down turn of the real estate market, the country has been on pins and needles about a looming recession. This led the Feds to slash interest rates by 3% in the matter of months. This was another important factor to drive us to buy - interest rates were lower than they had been in a long time. So at that point in time, we enjoyed the benefits brought on by the combined factors of lower home prices and lower interest rates.

Then little did anyone (including us) could predict, mortgage rates have actually been steadily rising again since April. Today the rate is 0.875% higher than the day we locked in our mortgage rate. Do not under estimate the difference of 0.875%. This equates to $235 more a month in mortgage payments. That’s a significant amount.

To analyze if we made a good decision to purchase our home two months ago compared to purchasing one today, let’s put these two factors together - decreasing home prices and rising interest rates. With mortgage rates 0.875% higher than two months ago, a comparable deal today would require a purchase price that is 10% lower than our purchase price two months ago. I don’t know what the statistical numbers are but from what I see in the market nowadays, there isn’t a comparable house similar to ours that is selling for 10% cheaper. Houses in our area that are listed for that price level all require a substantial amount of work to bring up to par. So in retrospect, we made a wise decision to purchase our home two months ago versus now. Versus one year from now? Who knows. The bottom line is we are happy with our purchase and we thank all the forces that came into play to make it happen.