NJ Real Estate Market Forecast 2011 Written for the Buyers Perspective
Despite the story of record-low interest rates dominating headlines, many consumers still don’t grasp the significance of the opportunity in front of them. What’s more, many would-be buyers are convinced that prices will go down. Don’t make the waiting game MISTAKE.
Home buyers like you should understand that low rates are the best thing since sliced bread. That and low house prices. That’s the best of both worlds. (Low Rates and Low House Prices).
I, Angie Perez, was a home buyer in 2006. So, I remember how many desireable houses were out of my range then, but not so much now. Plus, my interests rate then was 6.625, which was decent for that time but I was limited in the number of choices (houses) I could choose from. Even still, I made a choice and I don’t regret buying a home at that time, although I wouldn’t mind buying a home again in this market given the opportunities in the market place.
PROs: The NJ Real Estate Market Favors Buyers in some Towns and in Some Situations
Overall buying a home continues to be a smart investment. To help you see how waiting for the bottom of the market may make you miss it entirely, we looked at a few scenarios:
Home A has a current value of $250,000 in 2011. The value fluxuates to $237,500 in 2001 (5% of its value in 2010).
Not assuming PMI or downpayment, if you finance House A at 4.5% for 30 years, your monthly payment would be: $1260.54. Same house at a lesser price but at a higher interests rate, let’s say 5% would put you at a monthly payment of $1267.52. Waiting for the market in this scenario is a wash in this case.
Consider a comparison of today’s prices and rates with several future scenarios. That’s the interest rate chart above at the beginning of this post. Buyers who wait, might see first-hand how much money they could lose over a monthly and even over the life of a 30-year loan — even if prices go down. (WE dare to speculate that if prices went down, and it may not go down in all towns, we could see a 5% decrease in home values).
A smart buyer compensates for future changes. Today’s homesellers are distressed property owners in many cases. But you should know that the non-short sale houses is the hot listing inventory because the opportunity to close successfully and within a short period of time is higher than waiting for a short sale approval from a lender, especially on houses with more than one lien holder.
CONs. Wait Time and As Is.
On the flip side, non-short sale homes tend to sell first, faster and close for near asking price. In some areas, you may even see multiple offers and properties selling for more than asking price. What this means for home buyers is to make sure you know and undertstand the type of sale you are involved it. Here are some short codes to remember:
- New Construction=Builder to Buyer
- Normal Resale=Homeowner to Buyer, not lien holder approval necessary
- Short Sale=Homeowner to Buyer and Subject to Lien Holder Approval, wait time to close can be 3-18 months
- REO=Lender to Buyer, these are foreclosed properties.
Bank owned properties can be a smart buyer’s goldmine, but it could all present a number of risks. REO or real estate owned homes (bank properties) are sold as is, which can make it difficult for a buyer to assess if the home requires repairs or has an hidden (latent defects). Generally foreclosed homes are sold for a discount as high as 30% off of market value, but given an unknown condition, buyers of foreclosed homes should proceed with caution and consult an experience agent like me to assess which properties are worth seeing. Also, if the property has tenants in it and was foreclosed upon, you should be prepared to clean up or evict the tenants.
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