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Wednesday, May 8, 2013

Peak Selling Prices and Low Interest Rates Mean a Great Market for Everyone



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In 2007, the U.S. stock market peaked before the economy headed into recession. Today, the stock market is at about the same level. But this time, experts say, it’s different. Most companies have more cash and are more profitable in 2013 than 2007.

I think there are parallels between the stock market and the real estate market. Home prices are right around 2007 levels, but the market is healthier because of low interest rates. Just like the stock market, you are getting a better product for the same price. You can get more home for less money than in 2007 with a big difference in your monthly mortgage payment.

That’s the advantage for sellers. For buyers, the low rates mean you can return to the market at a peak price that’s still a better deal to sellers because of interest rates.

With interest rates right around the 4 percent mark, about one-third of your mortgage goes toward principal. That’s amazing compared to the days when between 5-8 percent of each payment applied toward principal.

Peak pricing for sellers and record-low interest rates for buyers means it’s a great time for both to enter today’s real estate market.

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