In my travels around the region, one question I hear over and over again from people is, “Should I buy now or wait till later?” It’s a great question to ask in the face of some of the lowest interest rates we’ve seen in recorded history. But, it’s a tough question to answer within the context of today’s market because conditions vary greatly from one price range to the next. In the absence of a crystal ball, I will do my best to explain how I see the market and what buyers might want to consider as they plan their next move.
More affordable prices:
This is the part of the market where homes are priced at or below the median price in a given area. For example, in Seattle that number stands at about $360,000. In Bellingham and Portland the median home price is about $240,000. For those thinking about buying in the ‘more affordable’ market, the most important thing to keep in mind is Buyer Purchasing Power. Most economists agree that interest rates are as low as they’ll go, but many of them disagree about when they’ll start to rise. The economic events in Europe helped keep U.S. interest rates at their current lows longer than originally expected, but as a result, they now represent the wild card. As a buyer who is trying to time a purchase in the ‘more affordable’ market, it’s important to understand that a 1% rise in interest rates equates to about 10% less purchasing power. Prices in this market are expected to remain relatively stable, but even a moderate drop in prices will not make up for the lost purchase power when interest rates rise. So, my advice to these buyers is that if you’re in a good position to make your move, this is a great time to check out your options.