No Kidding, Buyers. It's Time.

Prices on the Cape up 9% in six months.

We've all been hearing that now is the time to buy, but still people are holding out waiting for 'the bottom'. Well, folks, the bottom has come and gone. We are now on our way up, as evidenced by the rising of both interest rates selling prices. In six months Cape Cod has gained a half percent in rates and 9% in prices. The Wall Street Journal just named the Cape as one of the Hot Spots for buying vacation homes in 2010.

Let me spell it out for you: A lot of you have been shopping since this summer. If you were looking at a $500k house then, you could have gotten an 80% mortgage for under $2000/mo. Today, that same house is valued at $545k, and if you want that same $2k payment you'll need to come up with about $168k (or 30%). Summer 2011 will bring even more growth.

Don't get me wrong, this is still a very auspicious time to be a buyer. But the low interest rates, low prices and relatively high inventory were all symptoms of an unwell economy. As we recover, the rare opportunities that are in front of you now will fade. Get off that pot.

What do the changing interest rates really mean to ME?

With all the talk of interest rates going up or down and who benefits and who pays, it can be confusing to know how these economic changes affect you as an individual. In real estate here's what it looks like:Let's say you have been looking at houses since this summer and at that time your bank told you that you were pre-qualified for $280,000 on a 30-year mortgage with 20% down at 4.375%. That means that you could spend up to $350,000 on a house. This would give you a monthly payment of about $1400. However, today's 30-year rate is 4.875%, a full half percentage higher than it was in August. To keep the payment the same on a 30-year mortgage at today's rates, your house budget just shrank to $329,000.

If you are the seller with the $350,000 house, it's pretty easy to connect the dots from here. Your house just dropped $21,000 in value. If you want the house to stay marketable, you would be wise to reposition the property so it gets in front of the people who can afford it, or make enough improvements to it so that it is worth the extra $21k. Chances are if your house was on the market for any length of time at $350k, it might have been a little overpriced to begin with. Time is money; don't waste any of it waiting around. If you aren't getting this information from your Realtor, find it somewhere or hire a new agent. There are hard decisions to be made in this market and those decisions should be informed.