TOP FIVE REASONS TO BUY A HOME 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%, accordingto Freddie Mac, but many economists believe we will see 5% rates nextyear. As interest rates increase, so do your monthly payments.
A $300,000 house at 4.16% with 20% down would have amonthly payment of $1,168. With a 5% interest rate, that payment increasesto $1,288.
2. There’s More Inventory
As more houses enter the for sale market, pricesstabilize. “Inventories are at their highest level in over a year, and price gainshave slowed to much more welcoming levels,” said Lawrence Yun, Chief Economistat the National Association of REALTORS®.The upside is consumers now have morechoices, if they are looking at existing homes.New homes are another story: Yunsays new construction needs to double its current production to meet marketdemand.
3. Home Prices Are Going Up
Home prices are rising.The median price of an existinghome was $223,300 in June, or 4.3% higher than June 2013. That’s the28th consecutive month of year-over-year price gains, and economistsexpect that trend to continue. However, we are still at least 20% off the peakprices of 2006.
“Attempting to buy a home when the market is at itslowest point—or to sell at the peak—is tricky,” said Jonathan Smoke, ChiefEconomist 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 purchasingpower, and that’s a reflection of price and interest rates, which will both behigher in the future.”
4. Rents Are Sky-High
If you live in a big city, then you know rent isastronomical. In San Francisco, many people are spending 42% of their monthlyincome to pay the rent. Nationwide, rents are rising at a 4% annual clip.It’snot 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 somepoint.
Buying a home would lock in your monthly payment andstabilize 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 ahome is $1 million.
(If you’re renting and never thought you could afford tobuy a house, try our Rent vs. Buy calculator to see what’s possible.)
5. Employment on the Rise
Perhaps nothing is as important to the financialstability you need to buy a home as steady employment. The U.S. economy isfinally adding jobs—about 200,000 new jobs per month.
The next generation of home buyers—the Millennials—hasbeen particularly affected by the nation’s job slump.Saddled with student loans and tight lending restrictions, many inthis generation have been living with their parents to save money until theeconomy picks up.
If your employment prospects look good these days and theother four factors check out, then it may indeed be the right time for you tobuy a home of your own.