"It's now or never...," Elvis Presley sang. That line also applies to purchasing a home. At risk of sounding like a cheesy salesman, I can honestly say that it has never been a better time to purchase a new home.
Okay, that probably did sound cheesy. I make fun of car commercials that consistently tell us that "Now is the best time to buy a -insert car brand here-!" In fact, even real estate professionals were saying a few years ago, at the peak of the market, that it was the best time to buy. For a moment forget the cheesiness, and past mistakes of real estate & mortgage professionals. I will make my case as to why potential homebuyers are foolish (yes I said "foolish") not to purchase a home now.
I must give credit to Barry Habib, Chairman of Mortgage Success Source, whom I had the opportunity to spend some time with this week when he made a trip to Phoenix. He made this case by telling the story through the eyes of Rip Van Winkle. I took his idea and made some changes of my own.
The classic Washington Irving story of Rip Van Winkle starts before the American Revolution in a village in colonial New York. Forgoing the details, Rip falls asleep for 20 years and awakens after the Revolution. For our purposes we will revise the story a bit. Before he fell asleep Rip put some money away for a down payment on a house. And instead of colonial New York, our story takes place in suburban Phoenix.
Rip Van Winkle wakes up today after a multi-decade slumber. He takes his money that he had set aside before his prolonged nap and immediately begins shopping for a home. He does some research and discovers that home prices have dropped around 50% in four years. He is astonished. "You mean that if I woke up just four years ago, I would be paying double for a house?" he asked his Realtor. "I can't believe how lucky I am."
Rip researched further and realized that he could get an $8,000 federal tax credit if he has a contract prior to April 30 and closes by June 30. "Unbelievable!" Rip exclaims. "If I had slept in for just a few more months, I would have missed out on this opportunity. Thank goodness I woke up when I did. This seems to good to be true!" Then he thought for a moment.
"There has to be a catch," he thought to himself. "Interest rates must be high. They are probably going to stick it to me on my home loan." So he asked his loan officer about it, and he was again astonished to learn that rates were near historic loans. " Do you mean to tell me that along with a 50% discount from home prices four years ago, and an $8,000 tax credit, I can get an interest rate on a 30 year fixed mortgage that is within .25% of all-time lows? I can't believe how lucky I am to have woken up when I did!"
Rip was indeed lucky to wake up at the right time in history. Don't miss your opportunity.