The months ahead offer a prime opportunity to seek the home buying trifecta: finding the right home at the right price for the right mortgage rate. Here’s why:- First, there is a wider variety of homes on the market now, including a mix of REOs, short sales, and
- Second, home prices have stabilized or risen in most California markets for at least a year, but still remain well below the peak levels of the last decade. There was a 10-to-1 ratio between the California median price and the California median household income during the last peak. That ratio has fallen to 5-to-1, a level that has not been seen in at least 10 years.
- Third, mortgage rates are at their lowest levels in over 50 years, pushing the monthly payment down dramatically. For example, if one buys a home at the September median price of $309,900, puts 20 percent down and obtains a 30-year mortgage at 4 percent, the monthly mortgage payment would be $1,330. If rates climb to 5 percent, the payment increases to $1,500, or an additional $2,040 per year. If rates climb to 6 percent, the monthly payment would be $1,670, or an additional $4,080 per year. The savings in just two years would exceed the value of the $8,000 tax credit.
Rates are at or near their lowest levels now, but will eventually rise as the economy gains strength. The supply of homes is better than last year, but data points to stable or modestly rising home prices over the near term. In the end, if a home buyer is in a position to buy a home that will meet their needs at a monthly payment it can afford, then they cannot lose.
