McNelis.biz

Chris and I have been watching the housing market with bated breath for the last few months, and will be over the course of the next year, since we hope to buy a home next year. So as opposed to most people, i.e. those who already own property, we are always looking for what is otherwise bad news. In this case the news isn’t prototypically bad, just seems like it might be a sign of things to come.

According to the National Association of Realtors, courtesy of this CNN.com article, sales of existing U.S. homes have sagged in in the month of May, by 6.6%. Why is this good news to me and my wife?

Well, for starters, higher interest rates are making it less advantageous to buy a home right now. In the monthly range we are looking at, one percentage point makes a difference of $200 a month in the mortgage payment, which is pretty big if you are trying to stretch yourself for the house you really want. Another reason this is a good sign for us, it points to a weakening market for the home-seller. For a home-buyer, a better thing couldn’t happen because it means that home values are likely to slow in growth (or become devalued temporarily) while the ebb in home buying continues.

Its all about supply and demand, as long as rates are high, demand will be relatively low, the trick is to buy right when the rates dip significantly because then home values will begin to rise again and the great deals of the slow period won’t be available any longer. Here’s to the bubble bursting in the next year, Cheers!