Not All is Lost
The news media is all over a story today from Fannie Mae reporting that homes are falling in value to 9 percent this year, 2 percent lower than the first-anticipated 7 percent freefall.
The bad news is perception is everything. When the news only reports that home values are plunging without balancing it with good news, the alarm the public feels is very real. However, mortgage rates are still incredibly low and there is an expectation that they’ll go lower, so not all is lost.
If you’re looking to sell your home in this market, it’s true that it’ll go for less than what it could’ve sold for this time last year. However - and this is important - if you’re looking to sell and buy another home, you’ll make up the difference in the home you buy. Plus, you will likely be paying a much lower interest rate to boot.
Why wouldn’t it be a good time to buy? Cost of living increases (a gallon of milk in Kauai, Hawaii goes for $10, while it’s only $8 p/gallon in Honolulu!!) sure have me wigged out so stepping into a big mortgage may be worrisome. Also, with gas prices rocketing faster than the Discovery space shuttle… we all worry.
However, it is still key to remember that this too shall pass and when it does, the growth in your home equity will be well-worth the leap of faith that our economy is solid enough to bounce back strongly in another year.
