We hear this question almost every day from our clients: Is NOW a good time to buy?
And our answer is yes, yes, yes, and yes again.
That’s four big affirmatives, because there are four compelling reasons to consider buying a home today–instead of waiting for the proverbial “train that has already left the station.”
1. Prices are Rising
The Home Price Expectation Survey regularly polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. A recent report projects appreciation in home values over the next five years to be between 11.2% (most pessimistic) and 27.8% (most optimistic).
According to the Joint Center for Housing Studies of Harvard University, the median price for existing homes jumped 10 percent from the end of 2012 to the end of 2013, while interest rates notched up from about 3.5 percent to almost 4.5 percent. Given a 20 percent down payment and a 30-year, fixed-rate mortgage, these increases pushed up the monthly payment on a median-priced home by a substantial 23 percent by year-end 2013.
The message in both of these respected reports is that the bottom in home prices has come and gone. Home values will continue to appreciate for years. From a financial perspective, waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are all projecting that mortgage rates will increase by almost a full percentage point by the end of 2015. An increase in rates will impact YOUR monthly mortgage payment.
3. Either Way You’re Paying a Mortgage
As a recent paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
4. It’s Time to Move On with Your Life
The ultimate cost of a home is determined by two key factors: the price of the home and the current mortgage rate. Indicators strongly suggest that both are on the rise.
But that’s only the financial side of the equation, and money isn’t everything. What’s the compelling reason that you are considering buying a new home? Do you need more space? A home that reflects your style? A better neighborhood? Top-notch schools for your kids? Closer distance to work?
These are the reasons that make buying a new home the right move for you.
So, bottom-line. If purchasing a home this year is the right thing to do for you and your family, buying sooner, rather than later, could lead to substantial savings over the life of your home mortgage.
- Buying a Home Is 44% Cheaper Than Renting | REALTOR® Magazine, 2013
- Field Guide to Buying vs. Renting | National Association of Realtors
- Is It Better for You to Rent or Buy A Home? Use This Free Tool to Find Out. | New York Times
- Is It Better to Buy or Rent? | New York Times, 2014
- Mortgage Loan Rates on the Rise Again Last Week | Yahoo Finance
- Mortgage Loan Rates on the Rise Again Last Week | 24/7 Wall St.
- Mortgage Rate Forecast: Can Interest Rates Sustain These Low Levels Much Longer? | The Mortgage Reports
- Rent vs Buy: Where Should You Invest? | Mortgage Dex, 2014
- Renting vs. Buying a Home: Which Is Smarter? | U.S. News, 2014
- The Housing Affordability Challenges of America’s Working Households | Housing Landscape, 2014
- The State of the Nation’s Housing 2014 | Joint Center for Housing Studies at Harvard University
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