The Buyer's Blog

Many potential home buyers are currently on the sidelines trying to decide when to buy.  As always, all real estate markets are local, so the right answer to that question varies from market to market. 

In many areas around the country, home prices rose significantly over several years and those markets are now experiencing a correction.  In eastern North Carolina, outside of the water influenced markets, most areas didn't experience significant increases in property values.  Consequently, most of these areas have not seen significant declines in values as many around the country have. 

Another thing to consider when making this decision is current interest rates.  According to the latest release from Freddie Mac, current 30 year fixed mortgage rates are now averaging less than 5%.  These are historically low interest rates.  Nobody knows exactly what will happen with rates, but many expect rates to rise significantly in the coming years as inflation fears worsen. 

Cosider that at a 5% 30-year fixed rate on a $100,000 mortgage, the monthly mortgage payment (principal and interest only) is $537, while at a 7% interest rate, the monthly mortgage payment on a $100,000 mortgage is $665.  Or to look at it another way, at a 7% interest rate on a 30- year fixed mortgage, a monthly mortgage payment (principal and interest only) of $665 will pay for a $100,000 mortgage, while at a 5% interest rate, that same $665 monthly payment will pay for a $123,934 mortgage. 

Also, keep in mind that during the last significant period of inflation, annual average mortgage rates were over 10% for 12 consecutive years between 1979 and 1990, and peaked at 16.63% in 1981, based on Freddie Mac's surveys.  So the risk under a significant inflation scenario is high.  Just for comparison sake, the monthly payment on that same $100,000 mortgage at a 10% interest rate is $878 and at a 16% interest rate it's $1,345. 

Interest rates play an extremely important role in home affordability and these rates are at historically low levels.  Given this fact, along with the fact that values in the Pitt County area appear to be stable and not showing significant declines, there may never be a better time to purchase a home in the Pitt County area. 

The $8,000 tax credit takes that home buying opportunity even one step further for those who haven't owned a home within the past 3 years.  You can receive cash back from the government in addition to getting a low payment as a result of historically low interest rates.  It's really an incredible buying opportunity for those who qualify.

Of course, all of this assumes you can afford to buy a home and are not planning to move soon.  It is never a good idea to buy a home you can't afford.  Throughout the country over the past several years, many did just that and are now losing their homes as a result.  In addition, there are circumstances under which it makes more sense to rent than to buy.  Read our discussion of renting versus buying here.  Also check out our rent versus buying calculator here. 

We are available to help you with these important decisions.  And as always, there is never a cost to you for our services.  After all, at Buyer's Choice Realty, we are "The Buyer's Best Friend".