Listing Courtesy of VICKIE YORK AT THE BEACH REALTY
A few weeks ago, an eye-catching article surfaced on the Investopedia web site—one with the arresting title of “When is the Right Time to Buy a Home?” I have always assumed that for prospective area home buyer, the answer to that question varies by the individual circumstances. But if there is a more cut-and-dried universal answer, it would certainly be good to know it. Definitely worth reading.
Despite its name, Investopedia is not an encyclopedic history of investing. Its own history is interesting, though—it started in Canada, was acquired by Forbes, then sold a short while later to ValueClick for $42,000,000 (talk about good investments)!
The article that was to supply the answer to “When is the Right Time to Buy a Home?” did turn out to have the right answer, though it’s a little less definitive that you would hope—prospective Bethany Beach home buyers don’t get the simple “NOW” or “LATER,” which would be most useful. However, before the final answer is presented, scattered between the many ads and other clickbait that apparently pay for Investopedia are some interesting current facts and observations, and several cop-outs.
When it comes to the big question, “When is the Right Time to Buy a Home?” by halfway through the article, it’s looking a bit more like “now” than “later.” It cites The National Association of Home Builders’ Housing Opportunity Index, which now finds that nationally, the majority of homes are affordable for families earning a median income of $63,900. True, most Bethany Beach families don’t earn exactly $63,900, but still, it’s good to know. Reading on, we learn that this level of affordability has been better in the past, and might be better later “unless mortgage rates move higher in the future.” Since elsewhere on the site we find that “the consensus is that interest rates will rise,” it doesn’t take Sherlock Holmes to deduce where “When is the Right Time to Buy a Home?” is leading.
Or so you might assume, before the article quotes a saying on Wall Street: Don’t try to time the market, which Investopedia advises also applies to real estate. Oddly enough, it also says, “If you’re looking for an edge, interest rates are near historic lows so now appears to be a better time than most for purchasing a home.”
That’s a pretty strong hint, but the answer isn’t spelled out. Yet. There follow some bits of good advice (hire an inspector prior to purchasing a home; don’t buy a car while your credit is being checked; inquire about taxes) before we get to the ultimate heading, “THE BOTTOM LINE.” It took a while, but here is the advice Bethany Beach readers would have been looking for all along, bottom-linewise.
Investopedia’s answer for “When is the Right Time to Buy a Home?” is a lot more sensible than most: “When you can afford it.”
I couldn’t agree more. Even if all the other factors weren’t as positive as they are today, being able to make a good fit financially is at the top of the list. If now is that time for you—or if it’s time for you to put your own Bethany Beach home on the market—it’s also a good time to give me a call!
On January 6, the Senate confirmed Janet Yellen to head the Federal Reserve’s Board of Governors, making it the first time ever that a woman has led the nation’s most important financial institution. In some respects, it makes her the most powerful woman in the United States.
As with every personnel change in the Fed, Yellen’s rise has fostered plenty of concerns about the direction the Federal Reserve will take under her leadership. Since it’s the institution that determines the federal funds rate—which in turn dictates how much businesses and individuals pay for their loans—any change in Federal Reserve policy has a significant impact on our local home loan rates. Sooner or later, those rates affect just about all of us.
So, what clues do we have about the direction Ms. Yellen is likely to lean? One came just before the financial crisis. Before the financial meltdown, Yellen expressed concerned. In 2005 she is quoted as saying, “Analyses do indicate that house prices are abnormally high, that there is a “bubble" element, even accounting for factors that would support high house prices."
Last year was an excellent one for Delaware real estate, yet according to the Standard & Poor’s Case-Shiller Index, national housing prices are still 20% off the peaks set in 2006. Research from real estate website Trulia shows that U.S. housing is still 4% undervalued (compared with a 39% overvaluation reached at the 2006 peak). Happily, Yellen, an early identifier of the previous housing bubble, has not expressed similar concerns about today’s real estate market.
In 2012, the Federal Reserve’s previous leadership announced an unemployment threshold of 6.5% as the point at which it would consider raising interest rates. During Yellen’s first testimony as Chairman, she stated that the Federal open market committee would likely keep interest rates near zero well past that mark. In Yellen’s view, the “recovery in the labor market is far from complete.” As evidence, Yellen pointed to 7.1 million people who are mired in part time work but who would prefer full time jobs—and to the 3.6 million people who have been unemployed longer than six months.
For Delaware home loan rate watchers concerned that a rise in rates might dent real estate values, the new Chairman has sounded some reassuring notes. In her recent address to the Committee on Financial Services, Yellen explicitly stated that she expects “a great deal of continuity in the FOMC’s approach to monetary policy.” That could mean that interest rates for local home loans might gradually rise, it’s not likely to be precipitous.
The bottom line: dramatic rises in interest rates are unlikely under Yellen’s watch, but those considering getting a home loan who have not yet taken advantage of still low interest rates might do well to consider doing so.
Savvy shoppers; don’t sit on the sidelines, call/text 302-228-7871 or email me, Russell Stucki, REALTOR ® of Beach Real Estate Market to provide detailed information on Delaware homes for sale, investment and commercial properties, luxury and waterfront homes, condos/townhomes, new construction, lots and land, farms and equestrian properties located in but not limited to Bethany, Bethel, Bridgeville, Dagsboro, Delmar, Ellendale, Fenwick Island, Frankford, Georgetown, Greenwood, Harbeson, Laurel, Lewes, Lincoln, Milford, Millsboro, Millville, Milton, Ocean View, Rehoboth Beach, Seaford, Selbyville, Delaware.