By now, I realize everything in life has a cycle. I’ve lived through 3 real estate cycles here in Santa Barbara area. Inventory is tight, prices rise and rates have mostly stayed low for the past one two of those cycles. Each time the new low is higher than the cycle before it. Now rates are beginning to increase. We have seen rates go from the 3% and now to the 5% range. What does that do to buying power for potential home owners?
Buyers who thought they could buy more house with their dollar are seeing they get less today. Some of those buyers are reluctant to complete purchases begun when rates were lower. Those people will miss out in the long run since rates are not likely to drop again anytime soon. Personally, I can’t believe they have been this low for so long.
Even in our tight inventory market there are price reductions, based on the seller motivation. And with unemployment lower than it has been in years, the economic outlook good, if you can buy now you will be money ahead in the long run.
Rents rise on a regular basis as other costs of living rise. Buying today locks in your future costs. You know what your payments will be, and you don’t need to worry about a sudden move required by notice from a landlord.
All signs indicate this years residential real estate values will be up again. Will you be one of the new happy home owners or loose out until the next cycle starts again in 7 to 10 years?