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8 Nov 2010
Is now a good time to buy Sequim real estate? Many buyers are struggling with this question, and my experience, having worked with many buyers in this real estate market, is that some buyers are not sure if this is a good time to buy Sequim real estate. Here is a common sense approach to working through the relevant issues on this question.
We are at a true historical low in the 30-year fixed mortgage rate. Rates have not been this low since President Eisenhower was president. Click on this chart above and you will see an enlarged graphic of interest rates since 1971. Today’s interest rate is only 4.25% for a 30-year fixed loan. It seems clear that interest rates are going to start rising at some point soon, and with the massive federal debt, the expansion of the money supply by the Federal Reserve, and the expected declining value of the U.S. dollar, interest rates must rise. If economists who predict we will see serious inflation in 2011 are correct, interest rates will have no where to go but up. I believe anyone who intends to finance their Sequim real estate would be well advised to buy and finance now rather than wait until the spring months of 2011.
The other important issue to address is whether we are at a bottom in the real estate market and when will we see appreciation again in the Sequim real estate market.
Are we at a bottom in real estate prices? No one knows for sure. I do think, as does Stuart Varney of the Fox Business Network, that we are at or close to a bottom in real estate prices. Stuart said he was buying real estate now because he thinks it is the best investment he can make. Even if we are not, prices will not move much lower. Of course, if interest rates rise in 2011, the increase in a monthly mortgage payment could be hundreds of dollars per month over a 30 year mortgage, which would be the equivalent of a much higher purchase price if you wait. It’s common sense to balance these issues out so you come out ahead financially.
I believe this is a good time to buy Sequim real estate, because prices are truly low, interest rates are at the lowest ever, and we will see appreciation again. I believe it may be three to five years before we begin to see Sequim real estate start to appreciate slowly again. But I also believe that when the market has clearly reached that point of turning upward, we will see a jump in real estate prices. If you’re familiar with how volatile options on stock will move quickly in value like a rubber band, then you can understand how real estate prices will move upward when the time is right. Then appreciation will build on that increased value. I do believe real estate is safer than so many other places you could invest right now.
Consider the dollar is about to lose 10% to 20% in value according to people in the know. Sitting on cash could be the worst decision. Gold is at an all-time high. The stock market is subject to many economic variables, none of them very encouraging. For example, consumers and businesses have cut back dramatically on spending. Corporations have cut back on capital investments. Unemployment is high with no apparent let-up in unemployment compensation claims. States, municipalities, and the Federal government all are showing signs of possible bond defaults. Unfunded pensions in California and elsewhere may be the straw that forces some states and municipalities into bankruptcy. (Stuart Varney does not recommend owning government bonds of any kind because of the risk.)
If I’m right about interest rates being at a low point, real estate prices being at or near a low point, and inflation around the corner, where is the safest place to put your money? I think Sequim real estate is a safe and solid investment.
These winter months are the slowest time of year for Sequim real estate sales, which means that buyers have an incredible opportunity for the next two or three months. Next spring a lot of buyers will be competing against each other.
This is my opinion, and I could be wrong. Think about it. Is now a good time to buy your Sequim real estate?
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