Low-rate talk freezes home buyers
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By Richard Mize
Published: December 6, 2008
Let your yeas be yeas and your nays be nays, y’all — because the dithering in Washington, D.C., over what to do to revive the housing market is gumming up markets — even ours — not helping them.
A foreclosure sign stands on top of a sale sign outside an existing home for sale in the west Denver suburb of Lakewood, Colo., on Sunday, Sept. 28, 2008. An industry group said Friday, Dec. 5, 2008, a record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy. (AP Photo/David Zalubowski)
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The first question out of a home buyer’s mouth is “what’s your rate”? When I have supper with Dad, he asks “what are rates doing”? My accountant walks into the office and asks “what’s the rate”?
Obviously “rate” is a drug; the desired rate quote triggers a euphoric reaction that usually coincides with the opening of someone’s checkbook.
Unfortunately, when The Press writes about rates, their sources are government agencies that exist solely to keep the public anesthetized to the painful realities on Main Street. The Press accepts their outdated information and, absent due diligence, reports misinformation to the unsuspecting and gullible populace.
Even on the rare occasion when The Press gets it “right”, it’s still not right. For example, this was written above:
Freddie Mac… averaging 5.53 percent.. last week…
Why not simply call 3 or 4 credible LOCAL lenders and write about real rates? We’ve been closing loans at 5.125% for the past two weeks.
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I was a builder/developer in California in the 70s and 80s. In the early 80s, the same thing happened… “Low-rate talk freezes home buyers”.
Most home buyers refused to buy until rates dropped to 18%. That’s correct… 18%. And of course, some refused to buy until rates dropped to 8%.
In the ten years it took for rates to fall to 8%, the price of my custom homes increased from $150,000 to about $1,000,000.
Of course, those who bought at 18% would have paid $419,000 more than with interest at 8% over “that” ten year period
However, the home-buyers benefited far more than those who “swam to shore and got out of the market”, to wit:
~ $850,000 equity gain
~ Lifestyle enhancement: Living in your dream home, particularly if you were a renter.
~ (Increased) Mortgage interest write-off, a profound economic benefit, particularly if you were a renter.
Life is a series of snapshots… hourly, daily, weekly… Windows of opportunity that, if taken, will profoundly enhance your financial position and lifestyle forever. If you need more space for a growing family, don’t wait for a pie-in-the-sky rate. Buy the home now and start reaping the benefits.
Or don’t… RENT for the rest of your life while waiting for yet another rate drop.
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