Dearest Real Estate Boys; My spouse and I are considering listing our house and purchasing another one just because we can.  We do love our present home but just feel at our age we need a change.  It may sound silly but we’ve had the same walls and landscape for 20 plus years and we just want to look at something different.  The question we have is while we are just considering this move we feel it may be prudent to wait for 6 or 9 months before we forge ahead.  So, that’s the question. Do say “Happy Trails” or “You’ve Got to Know When to Hold’em.”

Dear Prudence

Dear Prudence, Won’t you come out to play?   Very good question considering it is 3/19 and the Feds just had their meeting and did not raise rates a few days ago.  And just what does that have to do with my question?  I want to know do I list now or in a few months.  And our answer is to give us a few lines and we’ll tie this all together.  There are two options for you, Dear Prudence, list and sell now or as you said wait for a while. 

Option #1 is to hold your reigns tight and list you home later in the year.  I’m hearing you Dear Prudence, why do that?  Well, by doing nothing you are getting nothing in return.  You haven’t gained or lost any money.  By doing nothing you may be playing right into the “too big to fail banks” hand.  By that we mean, the “too big to fail banks” have so much money sitting in their vaults they can hardly close the doors on the safe at night.  Big banks borrow from the Fed at .75%, that is again point seven five or ¾%.  We as consumers place our life savings of say $22 bucks in that bank and they give us in return .30% or a third of one percent back in interest.  I just checked my account and they called it “Prestige Investment Checking.”  But when the “too big to fail” banks LOAN me that money back they charge from 5% to 8% interest.  Further, Lloyd and Larry don’t feel the banks even want to lend you money for anything right now.  Mortgage loans presently are hovering at 3.50% to maybe 3.75% but try and get a 30 year loan on a new house right now.  It’s like sitting in a chair with only one 25 watt light bulb, no windows and no air moving and Dick Tracy and his junior G men are asking you a lot of really stupid questions about your money.  Questions like “I see here you deposited (real question) $31.33 on August 9th last year.  We need to see from where that money came.”  And you answer, “If I’m not mistaken, my Uncle Albert paid me back for the pizza I bought for him at Costco.”  Or, “On your credit report we noticed you currently have a loan with us, what is it please?”  Getting a bit frustrated you answer, “Well that’s my current home loan we have with your bank and it is the loan we’re trying to refinance.”   In other words the lender gives you the 3rd degree to borrow money.  In today’s lending market it can be very a tedious adventure trying to borrow money.  Dear Prudence, open up your eyes.

Option #2 is list your home right now.  And Dear Prudence again I hear you asking “Why.”  Because as we said in the beginning of this article, the Feds had their spring meeting this week and locked rates for at least another quarter.  By locking rates if you list now and sell now you can still get a mortgage loan in the mid to high 3%.  Whereas if you wait you may be one of the lucky home buyers to get a new 30 year fixed loan rate in the 5%’s.  If you wait the Feds will meet again and possibly raise the rates.  The Feds have be talking about raising the rates as soon as the economy firms up.  For you Dear Prudence, and for us living in this Valley, we may not feel the good economy as does the rest of the good old U.S.A.  It’s not a matter of if the Feds raise the rate it’s when.  When they finally do start raising the interest rates these Boys feel the scrutiny lenders are putting you through now will ease.  In fact, we almost bet we could possibly go back to the lending practices of the early 2000’s when money was almost free.  You see Dear Prudence real estate runs in cycles; up cycles and then down cycles.  In the up cycle prices of homes go up and the lending is easy.  When we enter into a down market we see the 2006-2010 type markets happen.  If you wait Dear Prudence, while the value of your home may rise, so will the value of the home you purchase as well as the interest rates. 

Right now we are in a market where the sellers are fearful to list and the buyers are afraid to buy.  POTUS number 32; Franklin Roosevelt said in his inaugural address “the only thing we have to fear is fear itself.”  Good quote for today’s market.   If the buyers are afraid to buy and the sellers afraid to sell we have a stalemate and nothing is going to happen.  We have that in Sacramento and DC, we don’t need it at home too. 

“So Dear Prudence, won’t you come out to play?  Dear Prudence, greet the brand new day.  The sun is up, the sky is blue.”  It’s time buy and Prudence that means you.  We suggest if you think you might want to buy or sell do it soon before it’s too late.  “Our House is a Very, Very Fine House.” With two cats in the yard.