Our New Job
You’ve read the stories, seen the news:
– Property listings are down (52% lower than 2020 according to Realtor.com).
– Mortgage rates are near historic lows (3.02% at this writing).
– Housing demand is high as Millenials (72.1 million), have replaced Boomers (71.6 million), as the largest cohort in the population, resulting in a perfect storm for home buying.
Our new job at Homebuyer Associates is to help our clients limit how much they overspend for a home. No one likes to pay more for something than it’s worth yet it can make sense to buy a home in this market…but sound decisions need to be made and the process fully understood.
Among the benefits of home ownership: Your home becomes a forced savings account, you lock in a portion of your housing costs and someday you own a home outright – a plus in retirement. Recent tax law changes have made interest deduction less of a benefit.
I ask myself, “What would the 30-year-old Michael D. Holloway do in this housing environment?” Under the right circumstances I’d buy a home. The key words are “right circumstances.” My statement is an historical fact. I purchased my first home when mortgage interest rates were 15%. The circumstances were right.
The circumstances are wrong when you buy absent information or buy out of panic or fear. So, is now the time to buy a home? Ask yourself:
1. Why do you want to own a home? Do you need more space, do you want to take advantage of low interest rates, your friends own a home, or maybe you want to build equity?
2. Do you have a home to sell?
3. Do you have 15% or more for a down payment?
4. Where do you plan to be career wise in 5-7 years?
Now, sit down with an Exclusive Buyer Agent – preferably Homebuyer Associates – and discuss your housing wants, needs and goals as well as numbers 1-4 above. Develop a plan and process.
(Notice I said Exclusive Buyer Agent, not “buyer agent.” A “buyer agent” may work in a company or on a team that is also listing the home you want to buy. Say it with me people – CONFLICT OF INTEREST).
Cruising real estate pornography sites – Zillow, Trulia or Redfin – is not a plan or process, and does little but add to a level of panic and in many cases mis-information. (Why else would 3 real estate sites have 3 different values of up to $75,000 difference for one home?)
The most important bit of advice we can provide in this market doesn’t involve housing or money, it involves human nature:
“Be wary of emotion as a motivator. Emotion is energy without structure, without reason and can be a dangerous indulgence.”
Find the Zen of home buying:
Two young fish swim past a coral reef. An older fish watches them and shouts, “How’s the water over there?” The two young fish are puzzled and answer, “What water?”
Be wary of swimming in a sea of real estate mis-information, not fully aware, not conscious of the real estate process. Swimming in those waters increases your risk of drowning amidst the noise of the marketplace.
Thanks for reading,
Michael D. Holloway
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