THE GOOD THE BAD AND THE UGLY

Below is a chart of weekly mortgage rates dating back to 1971.  This shows just how low mortgage rates are historically speaking.

THE GOOD: Since mortgage rates are at record lows, it enables home buyers to increase their buying power significantly since a home buyer does not buy a home so much on price, but more on payment and the lower the mortgage rates, the lower the payments on a home purchase.



THE BAD:  The reason mortgage rates have hit these record lows is due to investors fleeing for safety in the wake of the Wall Street sell off over the past few weeks and the demand for mortgages is down.  As the 10 year treasury prices increase the yield decreases,  fixed rate mortgage backed securities are closely tied to the 10 year yield.  For the yield to hit these record lows shows just how bad the economy is for investors to except such a small yield on their investments vs. possible big losses in the stock market. http://money.cnn.com/2011/08/19/news/economy/thebuzz/index.htm

THE UGLY: Since the government does not factor food prices and energy prices into its core inflation figures (how convenient) and we all know these prices have increased significantly over the past year  (see real inflation- click here) The cost of almost everything will continue going up for all of us.  So inflation is a serious issue as it erodes buying power.  The best way to hedge your expenses against inflation, get your biggest expense lower i.e. "your housing costs" so if you already own a home try and refinance to lower your payment. If you rent, now is the time to buy a home as rents are already increasing and will continue increasing as the CPI (consumer price index) continues increasing.  Over time your low monthly payments will give you more and more hedge against the increasing inflation.  Not to mention real-estate runs in cycles and historically home values double every 10 -12 years mainly due to inflation!

So buying a home today and holding for the longer term will only provide you greater net worth.  Historically homeowners outpace non-homeowners in creating wealth over their lifetimes.

To discuss your options,  please give me a call 253-686-6690

Tacoma, Seattle Lead List of Strong Housing Markets

What’s the top place in the U.S. to buy a home over the next two years? That would be Tacoma, Wash., according to financial-data firm Fiserv.
Despite the gloomy picture for the national economy and housing market, residents of that city, on Washington’s Puget Sound, are in for a 25% increase in home prices by spring 2013.  Read full article here: http://blogs.wsj.com/developments/2011/08/09/tacoma-seattle-lead-list-of-strong-housing-markets/ 


What a great buying opportunity for anyone who wants to take advantage of low home prices, low mortgage rates and the opportunity to create net worth in real estate.  We can also assist investors in buying homes at auction for even greater deals.  Give me a call today 253-686-6690