Are prices going to drop, should I wait to buy?
Sunday, April 2nd, 2006I have had a couple of clients mention they are waiting for prices of Real Estate in Marin County to drop before they purchase a home. For a while, the newspaper headlines warned the sky was falling but now the consensus seems to be there will be a soft landing from the rapid housing appreciation.
Looking back at the 41-year history of average Marin County Real Estate prices reported in BARIES MLS there have been two years when prices were lower than the previous year. In both these instances the drops were relatively small; under two percent.
Remember though, historically the odds are not leaning to prices dropping. After all, two years of price reductions and thirty eight of increases means 95% of the time Marin prices have increase year over year.
When we consider interest rates, the argument to wait makes even less sense. Let’s say on this $850,000 home we have a 20% down payment that leaves us with a $680,000 loan. 30-year payments at the current rate of 6.5% are $4,298. If rates go to 7.5% (which historically is more likely than a price drop) the payments are $4,755.
One question you have to ask is, have the people who think prices are going to drop sold their homes? Most likely not.?
