The great financial sage, Warren Buffet has a philosophy, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when other are fearful.” While Mr. Buffet was writing about buying stocks, the same can be said for what is happening in the Chicago real estate market.
I believe it is important to look at the facts when considering purchasing a Chicago condo or loft in an historic perspective. This factual information leads me to believe that if you are a first time buyer and going to live in the condo or property for a number of years, the time to buy now is becoming obvious, and it is during 2009 while interest rates are low and the goverment is providing extra incentives for first time buyers. Why buy Chicago real estate when the newpapers and the media are questioning if the time is right? The three very important reasons are: (1) Interest rates are near all time lows, (2) Home prices have declined to levels not seen in years, (3) Qualified first-time home buyers are now eligible for up to an $8,000 tax credit.
And finally, let’s keep in mind that lower prices do not always equate to lower payments. Sean Lowry of On LaSalle/Pacer Home Mortgage at [email protected] reminded me that even if you believe that home prices will continue to decline, it’s very difficult to believe that interest rates will remain at these low levels given President Obama’s stimulus package.
Sean points out that even if home prices were to decline 10% and if rates increase at the same time by 1.00%, your actual monthly principal and interest would be higher. So as you can see, the low current rate variable contributes alot to your monthly cash outlay for housing. And by the way, do not forget about the tax deduction one gets for real estate taxes and mortgage interest.