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5 Reasons to Buy a House Right Now
Real
Estate News Aug 5, 2014 By: Chrystal Caruthers
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Buying a house is a highly individual decision—and
a local one—but current trends are creating a favorable situation for many
would-be homeowners.Interest rates are low, employment is rising, home
prices—in most markets—are still well below their peaks, and rents are through
the roof.
Every family and each
individual has various factors affecting the ability and the decision to buy a
home. If you live in a market where studio apartments are $2,400 per
month—while nearby condos sell for $300,000—it might make sense to buy a house
instead.
(Remember, a local REALTOR® always is your best
resource in helping you assess market conditions.)
Five Compelling
Reasons to Buy a House Right Now
1. Interest Rates Are
Still Low
Mortgage interest
rates are still low—for now.A 30-year-fixed-rate loan now averages 4.16%,
according to Freddie Mac, but many economists believe we will see 5% rates next
year. As interest rates increase, so do your monthly payments.
A $300,000 house at 4.16%
with 20% down would have a monthly payment of $1,168. With a 5% interest
rate, that payment increases to $1,288.
2. There’s More
Inventory
As more houses enter
the for sale market, prices stabilize. Inventories are at their highest
level in over a year, and price gains have slowed to much more welcoming
levels,” said Lawrence Yun, Chief Economist at the National Association of
REALTORS®.The upside is consumers now have more choices, if they are looking at
existing homes.
3. Home Prices Are
Going Up
Home prices are
rising.
The median price of an
existing home was $223,300 in June, or 4.3% higher than June 2013. That’s the
28th consecutive month of year-over-year price gains, and economists
expect that trend to continue. However, we are still at least 20% off the peak
prices of 2006.
“Attempting to buy a
home when the market is at its lowest point—or to sell at the peak—is tricky,”
said Jonathan Smoke, Chief Economist for realtor.com®.
He compares it to
trying to time the stock market.“You might get lucky one or two times, but
overall, timing the market does not work,” Smoke added. “It all points to
purchasing power, and that’s a reflection of price and interest rates, which
will both be higher in the future.”
4. Rents Are Sky-High
If you live in a big
city, then you know rent is astronomical. In San Francisco, many
people are spending 42% of their monthly income to pay the rent. Nationwide,
rents are rising at a 4% annual clip.
It’s not unusual to
see adults rooming together in expensive cities like New York, San Francisco
and Chicago, but everyone
needs his or her own space at some point.
Buying a home would
lock in your monthly payment and stabilize your finances with a fixed-rate
mortgage. This is, of course, assuming you don’t live the San Francisco area,
where the average price of a home is $1 million.
(If you’re renting and
never thought you could afford to buy a house, try Realtor.Com’s Rent vs. Buy calculator to
see what’s possible.)
5. Employment on the Rise
Perhaps nothing is as
important to the financial stability you need to buy a home as steady
employment. The U.S. economy is finally adding jobs—about 200,000 new jobs per
month.
The next generation of
home buyers—the Millennials—has been particularly affected by the nation’s job
slump. Saddled with student loans and tight lending restrictions,
many in this generation have been living with their parents to save money until
the economy picks up.
If your employment
prospects look good these days and the other four factors check out, then it
may indeed be the right time for you to buy a home of your own.
