I just finished reading Thinking of Buying Your Dream Home? Do it quickly! There’s a great deal of wisdom in this brief piece.
First, the value of money is something, I’m afraid, that many people don’t fully grasp.
To their credit, it is a tricky topic. But let’s see if I can simplify the message.
- The value of a good or service changes over time. Usually higher, but that depends on the item.
- The value of money changes over time. It always drops.
The value of a dollar today is less than what it was 10 years ago, or even last year, due to inflation.
(May the good Lord help us if we ever get hyperinflation here in the U.S.)
So back to real estate. The good folks at KCM point out that home prices are going to be moving higher throughout 2013. Nationally, they estimate this change to be +3.1%. I feel like we’re seeing that take place here in Louisville, right now!
Experts are also telling us that the cost to borrow money, i.e. mortgage, is going to increase as well.
For example, if you were planning on buying a $200,000 home in January with a 3.5% 30-year mortgage but now find similar homes priced at $210,000 and rates increased to 3.75% the overall hit is quite large.
Trying to “time” any market is more art than science but it’s safe to say, “You’ll get more house for the money today than you will one year from now.”
If you’re one of the many people contemplating a move, it’s smart to consider all the factors, including these financial ones.