MINNEAPOLIS — You’ve probably heard stories of how crazy the real estate market is in the Twin Cities right now, with some buyers willing to pay $50,000, $60,000, or even $70,000 over asking price to get into a home.
Many people are thinking about waiting it out, holding off for a year and getting back into the market later in the hopes things cool down.
Here’s why that might not be the best idea for everyone.
Realtors say the crazy market likely isn’t going away any time soon. That’s because even with all of the new construction, they don’t think they’re going to be able to build enough homes to keep up with this demand.
And if prices continue to go up, say 10% over the next year, which is a pretty conservative estimate, a $300,000 home now would be a $330,000 home next year.
That may not sound like a lot, but look at the down payment.
If you want to pay 10% down, that’s an extra $3,000 cash the buyer needs to find. And if interest rates rise over the next year or so that would also add an extra cost as well.
A local realtor said every percentage point that the interest rates go up, that’s like adding an extra $100,000 to your monthly mortgage bill. So, suddenly you’re not able to afford as much house as you can right now.
This may sound discouraging, but Tuesday at 10 p.m. on Take KARE of Your Money, Gordon Severson breaks down some tips and tricks you can use to stay in the market and ahead of your competition.