Thinking about waiting for the real estate market to crash before you buy a home in this competitive market? Spoiler alert, we don’t think the market is going to crash! In this episode we are interviewing Armen Manokian with Coastline Mortgage to discuss why we think the market isn’t going to crash and why now is still a great time to buy a home.
James Bowerman: Should I buy now or wait for the market to crash? All right, thank you everyone for joining us. I’m here today with a good friend and colleague, Armen Manokian, with Coastline Mortgage.
Armen Manokian: Hello everyone.
James Bowerman: I don’t think the market’s going to crash, I think because of basic supply and demand, inventory is really low right now. A lot of buyers are out there, they want to purchase homes. Interest rates are really low, which is a topic we’ll jump into. This isn’t 2008, a lot of things were put in place in 2008.
Armen Manokian: The lending industry is very tight. As some of you may know, I joke around with people at times and say, “We’re going to need a blood sample.” Yeah, 2008, I wasn’t in the market back then, but from my understanding and everything I’ve read and the people I’ve spoke to, it was completely different. Lending was a lot more loose. Let’s say, I made 200 grand and they would give you a loan, and no questions asked and that kind of facilitated the crash to happen.
James Bowerman: Yeah. So let’s jump into interest rates as it stands now because that’s been a talking point for me over the last couple of months, that interest rates are expected to go up. Where are we going? Has it affected your business at all?
Armen Manokian: Well, honestly, it hasn’t affected my business. We’re still issuing preapprovals, we’re still getting buyers under contract, and believe it or not, interest rates are still at the lowest point, if you rewind, two to two and a half years ago. However, if you asked your parents, “Hey Mom, hey Dad, when you bought your house, what was your interest rate?” They’re probably going to tell you between 7 to 15%. So at the end of the day, everything is perspective.
James Bowerman: Where do you think we’re going as we continue through 2022?
Armen Manokian: With the Fed announcing that there are going to be rate hikes throughout the year, I can’t tell you exactly, but I would assume that we’re going to see at least a half a percent to potentially a full percent increase in rates by the end of the year. Even worse-case scenario, let’s say we do get into the fours, rewind two, three, four years ago, and that’s where the rates were at.
James Bowerman: If you were to buy now, purchase price of $500,000 and your interest rate’s 2.74%, your monthly payment without taxes and insurance would be $2,039. Now, if the market were to crash and that $500,000 house goes down to $450,000, but the interest rates tick up to where they were a few years ago, and your interest rate is now in the fours, it’s 4.46%, your payment would be $2,269, which is $230 more per month. If the housing market continues to depreciate, home values will rise along with interest rates, that’s where we look at the biggest change. That house is now $550,000, your interest rate is at 4.46%, your monthly payment goes up to $2,774 per month, which is $735 more per month.
James Bowerman: So again, a pretty significant change there, not based on the home value alone, but more so the interest rate. So thank you everybody for watching, I hope this helps and answers your questions on should you buy now or should you wait. If you have any questions or feedback, leave us a comment, and Armen or myself would be happy to get back and answer those for you. If somebody wants to get ahold of you, where should they go? How can they [crosstalk 00:03:10]?
Armen Manokian: Find me on Facebook or Instagram, just look up Armen The Lender. Or my phone number is (443) 306-8746.
James Bowerman: Until next time, we’ll see you again soon.