Mark and Lisa Ramsey

I posted this earlier today but it didn't format correctly. So, here it is again... let's see if it comes out formatted this time! Sorry for the big block post last time!

Home Buying Power Today vs. Tomorrow!!!

In less than four weeks buyers are going to lose a lot of buying power! Everyone knows that the tax incentives expire at the end of April but there's more to it than that. Some buyers are telling me that they are waiting to take advantage of the foreclosure glut that we have already seen start coming on the market. That's a good point because there are 3.5 million new foreclosures expected to come on the market in North America this year. Then, another 2.5 million are expected next year! So, what's the problem with buyers waiting for them?

It's all about buying power!

There are three factors that have created terrific buying power for today's buyers.

1. Tax incentives
2. Extremely low mortgage interest rates
3. Plenty of inventory in most cities in America

These three combine to give today's buyers a lot of buying power. However, these buyers will soon lose two of these three factors. With them they will see a huge amount of their buying power go! At the end of the tax incentives they will lose either $6,500 or $8,000 depending on their situation. However, many people haven't paid attention to the impact of increasing interest rates! This will be an even greater loss in buying power. Take a look at this:

• On a loan of $100,000 a 1% increase in interest rates will cost a buyer $11,500 in buying power and cost them $23,040.00 over the life of the loan
• On a loan of $200,000 a 1% increase in interest rates will cost a buyer $23,000 in buying power and cost them $45,720.00 over the life of the loan
  

You can see that the numbers get even larger with higher loan amounts. So, buyers need to understand that a drop in home prices over the next several months can easily be lost by an increase in interest rates. Why would anyone play that game when they can buy today at historically low rates, with a great selection of properties that are already priced to sell and they don't have to deal with bank owned properties. Instead, they are dealing with homeowners who care about the property and who need to sell.

Will interest rates climb this year?

The quick answer is, YES! Why? because the Fed stopped buying Mortgage Backed Securities at the end of March. This has already caused bond prices to go down and, in turn, mortgage interest rates to go up. At the time of this post the rates have already increased about 1/4% and it's only April 2nd! How long will it take to go up a whole point or more? Who knows but every bit they increase will cost a buyer dearly.

All Realtors need to inform their clients about what these changes are doing to their buying power. We need to ensure that we understand the market and transfer that knowledge to our clients. In reality, that's what they pay us for, not just to open doors and say, "see, here's the kitchen... isn't it beautiful!" lol

In less than four weeks buyers are going to lose a lot of buying power! Everyone knows that the tax incentives expire at the end of April but there's more to it than that. Some buyers are telling me that they are waiting to take advantage of the foreclosure glut that we have already seen start coming on the market. That's a good point because there are 3.5 million new foreclosures expected to come on the market in North America this year. Then, another 2.5 million are expected next year! So, what's the problem with buyers waiting for them? It's all about buying power! There are three factors that have created terrific buying power for today's buyers. 1. Tax incentives 2. Extremely low mortgage interest rates 3. Plenty of inventory in most cities in America These three combine to give today's buyers a lot of buying power. However, these buyers will soon lose two of these three factors. With them they will see a huge amount of their buying power go! At the end of the tax incentives they will lose either $6,500 or $8,000 depending on their situation. However, many people haven't paid attention to the impact of increasing interest rates! This will be an even greater loss in buying power. Take a look at this: * On a loan of $100,000 a 1% increase in interest rates will cost a buyer $11,500 in buying power and cost them $23,040.00 over the life of the loan * On a loan of $200,000 a 1% increase in interest rates will cost a buyer $23,000 in buying power and cost them $45,720.00 over the life of the loan You can see that the numbers get even larger with higher loan amounts. So, buyers need to understand that a drop in home prices over the next several months can easily be lost by an increase in interest rates. Why would anyone play that game when they can buy today at historically low rates, with a great selection of properties that are already priced to sell and they don't have to deal with bank owned properties. Instead, they are dealing with homeowners who care about the property and who need to sell. Will interest rates climb this year? The quick answer is, YES! Why? because the Fed stopped buying Mortgage Backed Securities at the end of March. This has already caused bond prices to go down and, in turn, mortgage interest rates to go up. At the time of this post the rates have already increased about 1/4% and it's only April 2nd! How long will it take to go up a whole point or more? Who knows but every bit they increase will cost a buyer dearly. All Realtors need to inform their clients about what these changes are doing to their buying power. We need to ensure that we understand the market and transfer that knowledge to our clients. In reality, that's what they pay us for, not just to open doors and say, "see, here's the kitchen... isn't it beautiful!" lol

Whether you are a long time Charlotte veteran or new to the area here's a helpful link provided by one of our local TV news channels. WBTV provides a "Newcomers Guide" that provides a vast amount of information from fun things to do in the area, where to get your driver's license, golf course locations and much more. Check it out - www.wbtv.com/global/category.asp?C=168889

Grab your running shoes and a friend and join your Highland Creek neighbors at the Run the Creek 5K run-walk event on March 20th. The fun begins at 9:00am at the Highland Creek Elementary School. For more information and to register visit - www.setupevents.com

Who isn't going a little stir crazy these days? If you're looking for something different to do on these cold, snowy, icy, freezing rain....days. Here's few ideas, we hope you find something FUN! Stanly County Winter Wine Festival Saturday, February 27 12:00p to 6:00p at Stanly County Senior Center, Albemarle, NC 283 N. 3rd Street http://www.mapquest.com/maps?name=Stanly+County+Senior+Citizens&city=Albemarle&state=NC&address=283+N+3rd+St&zipcode=28001&country=US&latitude=35.352024&longitude=-80.196363&geocode=ADDRESS&id=3258142 The Stanley County Winter Wine Festival offers many of North Carolina's finest wineries and vineyards. This is a great way to experience new wines or old favorites. Grab a friend and enjoy an afternoon out. Africa Alive Saturday, Feb 27 10:00 (Estimated start time, must confirm) at Culture & Heritage Museums 4621 Mt. Gallant Rd., Rock Hill, SC, 29732 (803) 329-2121 http://www.mapquest.com/maps?name=Museum+of+York+County&city=Rock+Hill&state=SC&address=4621+Mount+Gallant+Rd&zipcode=29732&country=US&latitude=35.01063&longitude=-81.06262&geocode=ADDRESS&id=3624851 The event focuses on the cultural traditions of the African continent through music, dance, storytelling, crafts activities and food. Charlotte Goes Green Saint Patrick's Day Festival Saturday, March 13 10:00a at Tryon Street, Charlotte, NC Wear your green and join the 14th St. Patrick's Day Parade and Charlotte Goes Green Festival. This is a one-day only event! This is quickly becoming one of Charlotte's largest parade with over 50,000 spectators this year. The festival will last 8 hours and feature 1 music stage, Irish crafts, food, beer, vendors and more!