Economically speaking, now is a great time to buy a home. Consider the following:
1. Interest rates are not going lower. For the first time in a decade, the Fed raised interest rates for a 30-year fixed-rate mortgage. However, the Fed is poised and anxious to raise rates again. Economists expect rates to hit 5% by the end of 2016. Buying a home before rates rise will save you substantially over the course of the loan.
2. There are cheaper mortgage insurance premiums in effect. Back in January 2015, The Obama Administration directed, via executive action, the Federal Housing Administration to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%. This makes low down payment FHA loans more affordable.
3. Home values are increasing. Home prices are slowly inching upward and they are only expected to keep increasing in the future. Inventory is down and is expected to shrink further.
4. Rent prices are increasing. Rent prices are increasing month after month in the United States. According to Zillow's most recent real estate market report, rents for residential housing in the United States grew at their fastest pace in two years in April 2015, surpassing home values. Rents outpaced home values in 20 of the 35 largest U.S. housing markets.
5. Winter is great for bargain hunting. There are many listings that have been lingering on the market for several months. Some of these sellers may be motivated to accept a lower offer. But don’t expect all homes at a discount just because it isn’t the spring selling season. Houses that are priced well and show well sell any time of the year at market value. There are admittedly less buyers (as many try to time their moves with the school year) but there are also less good listings for sale (for the same reason) in the cold of winter.
If you are thinking about buying or selling a home, give us a call today!
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