Is it good time to buy a house in Palm Springs?
We are frequently asked by our friends or investors if it is a good time to buy a house in Palm Springs area.
Ideally, the best time is when interest rates are low, when home values hit the lowest point and when a move fits your current situation, such as before the start of school, so your children are settled before starting a new school year.
Getting the good Interest Rate
If you’re looking to buy a home or refinance your current one in Palm Springs area, there’s good news: Today’s low mortgage rates are expected to continue into 2020.
The average 30-year fixed mortgage rate started 2019 at 4.68 percent and steadily declined before closing out the year at 3.93 percent. In 2020, rates are expected to remain mostly stable, not straying too much higher or lower from the 4 percent mark, according to Bankrate.
New Housing Bubble is forming?
Prices have soared for the past couple of years in Palm Springs area, suggesting that those who waited have suffered. Now some worry that a new bubble is forming. Homebuyers have cause to be nervous: during the crisis of 2008 and 2009 prices fell by 50% in some places. There are already signs that the market is stabilizing.
Banks are more cautious than at the pre-crisis peak. We don’t have the problem with subprime loans. Homebuyers are buying a house for long-term. They are not trying to make a large profit selling a house a couple years using an interest only loan. Its not the same now.
The Mortgage Bankers’ Association releases an index several times a year titled: The Mortgage Credit Availability Index (MCAI). According to their website:
Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit. Here is a graph of the MCAI dating back to 2004, when the data first became available:
As we can see, it is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage. This is Not 2008 all over again.
A Recession Does Not Equal a Housing Crisis
Many experts predict a potential recession is on the horizon. The good news is, home values actually increased in 3 of the last 5 U.S. recessions, and decreased by less than 2% in the 4th. It will not be a repeat of the crash in the 2008 housing market.
Is it good time to buy a house in Palm Springs area?
In our Investor Seminar (Unfortunately discontinued due to our schedule), we talked about Five Investing Myths. One of myths is successful investors are able to time the market. Truth is, in successful investing, the timing finds you. It is always the right time to buy the right property. You need to focus on why, rather than the market condition. Do you want to be mortgage free when you are 60 years old? Do you want to make $5,000 per month in passive income by investing real estate?
Savvy investors who purchased the property at the peak of market, did not panic during the crisis. Because they know the fact that as their tenants pay down their mortgage, they eventually own the property, which will increase their cash flow, the value of the Palm Springs Real Estate will always go up over time.