THE COST OF WAITING FOR HOMES PRICES TO DROP COULD COST YOU MORE IN THE LONG RUN

A while back a person with good credit could finance a $100,000.00 real estate purchase at 4% and have a monthly payment of principal and interest equal to $477.42. Currently that same purchase will finance at approximately 5% and the payment will be $536.82. If rates go to 6%, the payment will be $600.00 per month with a difference between $600.00 and $477.42 equal to $122.58 per month. $122.58 per month may not sound like much, but in purchasing power, $122.58 per month with 4% financing will purchase an additional $25,600.00 worth of home. Put another way, when rates go to 6%, the buyer who passed on the 4% purchase and who now decides to purchase that same $100,000.00 home, has just lost $25,600 in value. I see many people on the side lines waiting for prices to drop more. Will prices drop another 25% or is it more likely that interest rates will go up and prices remain relatively stable? You decide. Don’t forget, the above analysis represents only a $100,000.00 purchase; for larger more expensive homes, the loss multiples. As always, thanks for reading. Your comments are welcome.
Gregg Munson
Associate Broker
Russ Lyon Sotheby’s International Realty

SHORT SALES BAD MOUTHED BY PRESS IN FLAGSTAFF AND PHOENIX ARIZONA

Today, a Phoenix news channel just talked about a person who sold their home via a short sale and received a 1099 for the forgiven debt. The article mentioned, but in a very minor way, that there may be some IRS tax forgiveness in certain situations. In my opinion, the newscast was trying to make it appear that short sales are a negative thing. I think I speak accurately when I say that most homeowners are better off doing a short sale versus walking away and allowing their property to be foreclosed on. Anyone believing that foreclosure is the answer needs to do some research and seek a good CDPE, accountant, and/or knowledgeable lawyer prior to making their decision. I will be happy to offer my counseling services and to refer troubled homeowners to other good sources of information should anyone have an interest. Please don’t hesitate to contact me. Thanks for reading.