Some Think This Is The Time to Buy
Well, I found someone who thinks that you should get into the market now. At RealtyTimes.com, writer Anthony Carr says that you should buy now if you are looking for a new home. Why? Because lots of new home developers are offering some great incentives, and Carr thinks these deals won't last long.
Some of these deals he quotes are quite extraordinary. Consider just 4 that he lists:
* A straightforward cash incentive of $8,000 as a closing credit to the purchaser
* Another development offering a 2.5 percent financing incentive, which is a phenomenal deal given today's interest rates
* Yet another development offering a 5 percent closing cost credit (which really adds up on $500,000 price, which would make you entitled to $25,000)
* And, finally, a development includes a free rec room, full bath and $10,000 on closing
Now, why weren't the builders offering these kinds of deals when I bought?
Carr is correct; builders are offering these incentives because there is a lot more new housing available than demand for it. As a result, builders are forced to offer incentives to move inventory because once they have broken ground on a project, there's no turning back. Once a project is underway, the builder is paying carrying charges, and the builder does not want those charges to grow. Frankly, it's cheaper to the builder to offer incentives and get people into places faster than to have larger carrying costs and a higher price for the property later.
So, should you take the incentive now or wait for interest rates to drop in a few months when the Fed cuts the rates? Carr says, "Act now". His argument is that builders are taking steps to reduce inventory of houses now. They are postponing or cancelling projects where they can. This means that demand could outstrip supply in a few months once interest rates are more attractive. And the incentives will be gone.
He makes a compelling argument.