Purchasing Power! Excellent inventory choices, short term rate cuts, historically low mortgage rates and proposed revisions in mortgage programs set the stage for first-time homebuyers and move-up homebuyers.
Considering the many factors that influence the real estate market you may want to consider your current purchasing power. The real estate market has either stabilized or remains stable in most parts of the country. Long term fixed rates are in the 6% range and housing appreciation is stable so it’s a good time to analyze your position. First time buyers especially have an excellent opportunity in today’s market. Low interest rates provide leverage, and current inventory levels push sellers to provide buyer incentives such as paying closing costs, providing warranties and reducing prices.
Many would be first time buyers are unaware of the home they can buy with a mortgage payment rivaling what they currently pay in rent. If you want to know where you stand a mortgage calculator can show you your purchasing power in just a few minutes. It’s always a good idea to understand your financial position.
As for the move-up buyer it’s really just the next step in the process. The move-up buyer sells to a first-time buyer which frees up their funds to purchase their next home. Once their home is sold even if they don’t get the optimum price, they will use their resources (purchasing power) to purchase a home based on current market conditions as well. It’s an even money trade except the benefit is that the new home future appreciation gains will surpass the previous home due to the fact the it has a higher value. So while the percentage appreciation is similar, the monetary amount is greater. This is similar to the difference between having a $150,000 savings account and a $400,000 savings account. You will earn more money on the larger account at the same percentage rate.