Greater Milwaukee Association of Realtors: Realtors urge homebuyers to take advantage of historical anomaly

Contact: Mike Ruzicka

414.778.4929

October 6, 2009 – Potential homeowners have a unique opportunity in today’s real estate market.

Four conditions in today’s real estate market, while historically unusual, present buyers with a great opportunity that will probably not be repeated for a very long time. Those conditions are:

1. Low prices

2. A large supply of homes to choose from

3. Interest rates at an historical low

4. $8,000 homebuyer tax credit

Prices are down 20% – 25% in most areas from the market peak a few years ago, and down even more in some markets and neighborhoods.

During the boom years, houses were scarce. Inventory was so low that when a home went on the market is often received several offers within a day or so. Today, the exact opposite is true. There are many homes in each price category, providing a wide choice of home types, floor plans and architectural styles.

Interest rates are low. In fact, many in the housing industry believe any rate under 8% is a deal; which makes today’s rates, in the 5% – 6% range, fantastic. However, with all of the borrowing by the federal government it is expected that interest rates will increase in the future, and as the economy starts to recover interest rates may start inching up in the next 12-months. Here is a basic interest rate comparison for a $225,000 home, with a 5% down payment ($11,250):

30-Yr Interest Rate – Monthly Payment – Annual Payment – Total Payment of Loan

5% – $1,147.46 – $13,769.52 – $413,085.60

6% – $1,281.54 – $15,378.48 – $461,354.40

7% – $1,422.08 – $17,064.96 – $511,948.80

* Does not include tax escrow.

There is talk in Washington, DC about extending the Homebuyer Tax Credit – which REALTORS® support – but we doubt the other conditions present in today’s housing market will still be present.

The IRS recently created a YouTube video on the home buyer tax credit; see it here: http://www.youtube.com/watch?v=xRZiziAWOq0

The time to act is now! Contact a REALTOR® to help you get started.

The Greater Milwaukee Association of REALTORS® is a 4,000-member strong professional organization dedicated to providing information, services and products to its members to help them help their clients in buying and selling real estate.