There
are those of us who just won’t listen to the expert
advice when it comes to investments whether it is stocks,
bonds, mutual funds, or real estate property. We somehow
feel we can wish upon a star and wha-la we have timed the
market and made ourselves rich. Well, historically that has
proven to simply, not be the case. Take for example all of
those folk who lost their money in the stock market when
it rose to astronomical proportions and they decided to “jump
on the bandwagon”, most of them, way too late.
The experts said for a long time that
there was a complex phenomena going on and if you weren’t
already in the market, jumping in when stocks were already
high could be
dangerous. And, now as we know, it was dangerous, the number
of individual investors who lost huge sums of money was something
this country had not seen since almost the great depression.
Now, ditto the real estate market.
For those who bought or refinanced when mortgage interest
rates were at an all
time low and qualified for the lowest rate with a very high
credit score, that was great. But, experts have been saying
that the decrease in interest rates and the drastic and rapid
increase in home prices are a recipe for disaster. Now, to
make matters worse, there are who, again, just won’t
listen.
When housing prices hit an all time high recently, the ultimate
benefits went to those who sold and moved from a high priced
city or state to a very low priced city or state. It benefits
those who sell their current home with loads of equity and
are retiring and moving to a low-priced market or a retirement
home, or simply those still working but are moving to a much
lower priced city.
Even though interest rates are inching
up, and home prices are at historically high levels, you
have those who are trying
to time the market. They are selling their home high, and
betting that by the time they find their dream home the prices
will continue to climb. But, as history has shown, when home
prices reach to the sky very quickly, as did stocks in the
late 90’s there could be a huge collision, called a
CRASH. You could be left with a house with a negative value
for a long time, until prices catch up to a normal market.
What is the solution to avoiding a
crash? Wait until the interest rates settle out and the
home prices come down.
Pay attention to commentary by consumer advocates and those
who have your best interest at heart. Don’t listen
to advertising that list home mortgage rates as artificially
low. Currently, the average interest rate for a 30-year loan
is just over 6% for someone with relatively good credit.
Related links:
Home Inspections
Mortgage Calculator
Lois Center-Shabazz is the founder
of MsFinancialSavvy.com and author of the 3-time award-winning
personal finance book, Let's Get Financial Savvy! ISBN #0971979502.
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