First of all, it is impossible to actually “time” the market to the point of buying a home at the absolute “bottom” of the market. In the meantime, while you wait to “buy at the bottom,” what happens if interest rates go up? (and they will!)   Let’s assume you want to purchase a median priced home at $250,000.   If interest rates go UP by just 1/4 of 1 percent (.25%), you will need to earn an additional Three Percent (3%) in income to qualify for the same $250,000 house. If you don’t expect your income to go up by 3%, then you must purchase a home priced 3% less. What’s worse, for every .25% increase in interest, it ends up costing you an additional $9,518 in interest payments over the course of the loan. Now, if rates go up by one full percentage point (1%), that would cost you $38,072 in additional interest over the life of the loan.   What if rates go up 1, 2 or 3 percent while you’re waiting to “time the market?”   What will you actually save?  

We know that mortgage interest rates are at historical lows and will be going UP. The question is “When will they go up?   The window of opportunity for low rates may be only slightly opened. So, if you are thinking of buying your first home, a move-up home, a vacation home, downsizing or an investment property, right now may be your very best  time to do so. Otherwise, it could end up costing you more…a lot more, as rates begin to climb.  

My answer:   “The best time to sell your home is when you need/want to sell your home.” Too many times, sellers try to “out-think” the market. In other words, they want to or try to “time” the market.   That’s a little like trying to time the stock market.   Just when you think you have the top or bottom pegged and make your move, the market has already shifted and you miss the “sweet spot.”   The truth is, you cannot perfectly time the market.   You simply cannot adequately anticipate what the market is going to do. The only way to make a sound decision is based on information you have right now.   The only market you have is the market you are in RIGHT NOW…not the market of the past and certainly not the market 3 or 6 months from now.

So, let’s examine why, if you need or want to sell, you should sell your home now.

1. Less Competition: As we move into the holiday season, many people typically take their homes off the market. With fewer homes on the market there is less competition.  Less competition means lower supply and thus prices should stabalize (temporarily) or potentially move up, depending on your local market conditions.
2. Historically Low Interest Rates: As you know, interest rates are still at historical lows.   With the looming national debt and deficit federal spending, all indications are that interest rates are going to rise in the near term. For every 1/2% increase in mortgage interest rates, buyers will need an additional 6%) in income to qualify to buy  your home. Conversely, Sellers would have to  decrease their price by(6%)  to maintain the exisiting buyer pool.   The likelyhood of buyers being able to increase their income in today’s economic climate (in a time when companies are cutting back) is slim to none. To compensate, sellers will be forced to  reduce their price as interest rates rise in order to effect a successful sale.  For some sellers, this could force them into a “short sale” situation or perhaps, even foreclosure.
3. Buyers in the market during the Holidays are serious buyers: These active buyers  tend to NEED to buy a home sooner rather than later, often times due to a job transfer or perhaps even the sale of their current home, thus creating an immediate need for a place to live. Their level of motivation is HIGH and therefore, if you are priced and staged right for the market, your chances of a successful sale is much higher.  

So, the best time to sell your home is NOW, before you might be forced into an unpleasant financial situation!   We know the economic conditions we are dealing with today and  there is less competition on the market during the holidays. Take advantage of what this market is giving you to effect a successful sale. The uncertainty of the future could cost you money. You’ll be much better off saying “I’m glad I did” rather than “I wish I had.” Happy Selling!

In order to take advantage, you must not have owned a home in the past three years.   Buyers should have a purchase contract executed by early October in order to allow 45-60  to arrange mortgage financing, do home inspections and consumate the closing of the transaction by December 1, 2009.

There is not as much time as you think.   The sands of the hourglass are running out fast. If you have questions about the tax credit or about the process of purchasing your first home, post them here and I will get you the answers you need.   Who wouldn’t want an extra $8,000 in equity?