1. Interest Rates Are Still Low
Mortgage interest rates are still low—for now.
A 30-year-fixed-rate loan continues to hover around 4%, 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 4.00% with 20% down would have a monthly payment of $1,146. 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 in most markets, 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.
New homes are another story: Yun says new construction needs to double its current production to meet market demand.
3. Home Prices Are Going Up
Home prices are rising.
The median price of an existing home was $224,100 in December 2015, compared to $208,200 in December 2014. Month-after-month and year-over-year we continue to se the trend of price gains in home values, and economists expect that trend to continue. However, we are still not at the peak prices of 2006.
4. Rents Are Sky-High
If you currently rent, then you know cost of rent is astronomical. Nationwide, rents are rising at a 5-7% annual clip. Wouldn't your hard-earned money be better spent on something you own,especially something that is likely to gain equity, meaning more money in your OWN pocket? Also, buying a home would lock in your monthly payment and stabilize your finances with a fixed-rate mortgage. (If you’re renting and never thought you could afford to buy a house, try a 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.
Submitted by: Jaymie Denny