A combination of market factors may make you think you’re getting priced out of the home market, and now is not a good time to buy. Luckily, that’s not the case! Here are five reasons to consider buying a home before the end of the year.
Home prices are still off their highs
Yes, home prices are rising from the lows seen during the housing crash of 2008, but they’re still nearly 20% off their mid-2006 peak. According to the S&P/Case-Shiller Home Price Index, average U.S. home prices are currently at summer 2004 levels. In markets that are still recovering, first-time homebuyers could see significant appreciation over the next few years, if they buy now.
Interest rates are expected to keep rising
Until recently, interest rates have been slowly climbing. As the Federal Reserve concludes its economic stimulus plan, rates are expected to continue to rise. Some experts believe mortgage interest rates could hit 5% by the end of 2014 or the first quarter of 2015. And even a small bump in interest rates can mean a significant jump in your monthly note.
Rental rates are rising
There is always an argument to be made regarding whether to buy or rent. It’s all a matter of your particular situation – as well as the status of your local housing market. If you need to be mobile — prepared for job transfers or out-of-state promotions — or are continuing to search for “the perfect place,” renting is probably right for you.
However, if you would like to put down some roots, it might be cheaper to buy.
Of course, buying a home means more than a mortgage. Remember to consider the other built-in expenses: maintenance, insurance, taxes and utilities.
Consider your buying power
Americans have been steadily reducing their debt load. Maybe you have, too. The lower your debt, the higher your buying power. Creditors will consider your debt-to-income ratio – how much debt you have, compared to your gross (before-tax) income.
With lower debt comes a higher score
As you pay off student loans, credit cards and consumer debt, your credit score will improve. And that’s one of the biggest factors mortgage lenders consider when determining the interest rate and terms of your loan.
Basically, you should definitely consider buying this year. It’s unlikely the housing market will look much rosier next year, when interest rates and home prices could be even higher.
If you’re interested in seeing what you can afford, contact my office today at 702.331.8185.