Real Estate Headlines “Buy NOW or Be Priced Our Forever”
The real estate world has a few standard go-to phrases it uses to catch the interest of the
NOW is a great time to buy.
This is the chance of a LIFETIME.
At its core, real estate is a salesman’s world. Tacky as these lines may be, they are trigger phrases that do carry truth. Even if the generic nature of the pitch seems to show a lack of effort, most of these statements are viewed as a forgivable part of a sales-based business.
One of the most identifiable sales phrases was seen in 2000. “Buy now or be priced out forever!” Companies predicted never-ending home appreciation and saw that the price of real estate was outpacing the gains in income. If that pace had continued, the warning cry would have been accurate. Instead, real estate values took a 20-50% hit and every home suddenly became affordable again.
Now, thirteen years later, the fear pitch is finding its way back into real estate. This time, it is looking and consumer’s purchasing power. The path to the last bubble was clearly marked and many chose to ignore it taking it to be a normal peak and valley of a complex market. If home buyers are wary of something similar happening this time they should pay attention to two points.
- Are home prices likely to sustain their current values or appreciate?
- Can I afford a home in the community long-term?
The current sales pitch has shifted to “Buy now or Lose Your Buying Power Forever” Apart from cash buyers, this fear inciting headline may hold some clout. Today’s ultra-low interest rates have made mortgages cheaper than ever but that means that an increase of even .25% can create a comparatively large drag on the market as a whole.
“A quick explanation of buying power: when mortgage rates are floating around 8% (the historical average), a market increase of 1 percent in rate would increase a buyer’s mortgage payment by 12.5 percent. That’s 12.5 percent more cost for the same loan, a significant strain on buying power, but not overwhelming. At today’s rates of 4 percent, a market increase of 1% would increase the mortgage payment by 25 percent, doubling the reduction in buying power. This is a major shift in what the buyer can afford.” http://www.realtor.com/blogs/2013/06/07/buy-now-or-be-priced-out-forever-the-real-estate-bubble-pitch-resurfaces-with-a-twist/
This is not the end all warning the 2000 market faced and it will more likely than not just mean that many families will miss out on the opportunity of a lifetime, not lose their buying power forever. Buyers who do act today and secure themselves within a long-term financing option at today’s prices and today’s interest rates will be sitting in a much more comfortable position then those who wait until rates rise. So here is my marketing pitch, there is no time like the present to buy a home. Find out more by contacting my today to learn just what your best options are.