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There’s an investment strategy I’ve always heard, “Buy low, sell high”. The people who purchased in 2004, bought high and are now selling low. The buyers who aren’t buying now and “on the fence” waiting to buy, are they waiting for interest rates to go higher and values to go up?

Interest Rates as of today: 

• 30 year conforming - 5.875
• 30 year jumbo - 6.875
• 7/1 jumbo - 5.75
• Oregon VA - 5.25
• Oregon State Bond - 5.625

According to Bankrate.com, 43% of their panelists believe mortgage rates will rise over the next 35-45 days. Only 14% think rates will fall, and 43 % believe rates will remain relatively unchanged (plus or minus 2 basis points).

“When everyone else is panicking, it’s time to buy!” - Warren Buffett

I know of buyers who are just “sitting on the fence” waiting for the bottom to drop. You’ll know when the bottom has dropped when interest rates go up and real estate values start going up as well.

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The following is a reprint from TIME magazine (CNN) (April 21, 2008):

“But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.”

“Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.”

A recent Realty Time article says to pay more attention to our local market rather than national surveys. They further say:

“A direct impact of national reporting is that consumers do not realize that, in reality, real estate markets are local, not national, and that the doom and gloom reports broadcast nationwide are not necessarily a true reflection of what is happening in their particular market” .

“Market conditions are most favorable for those who plan to buy now and stay put for years.”

“The interest rates are so good right now that this factor alone could actually trump any sort of loss, real or imagined, that a buyer could be worried about by putting in an offer now”

Napoleon Hill: “Do not wait; the time will never be ‘just right.’

(For more local and national real estate news, click on my monthly newsletter - JUNG’S JOURNAL - on my website www.bettyjung.com).