After getting off to a rocky start this spring, existing home sales jumped dramatically at the national level. As the fall home buying season kicked off, both foot traffic and pending home sales rose dramatically. This is important, because foot traffic and pending sales are leading indicators. Foot traffic leads to pending sales. Pending sales lead to closed sales. In spite of the occasional bump in the road, the real estate market across the country is gradually returning to normal.
While the Portland, Oregon market is still technically a sellers market–meaning we have less that six months of inventory at virtually every price point–value conscious buyers are keeping home prices in check. Today’s buyers want value, and even though inventory is low, overpriced homes continue to languish on the market.
However, when a competitively priced home hits the market, it sells QUICKLY. The proof is in the numbers. In the Portland Metro market, the difference between the listing price and final selling price is less than 2%.
The message is clear. If you’re a seller, price your home in line with the market. If you’re a buyer, when you find the right home, make a strong offer. In other words, both buyers and sellers must be realistic if they want to close the transaction.
If you’re contemplating buying a home in the Portland Metro region, here are four great reasons why now is the time to take action.
1. Prices will continue to rise
Prices are back to 2005 Q1 pricing. Looking forward, the Home Price Expectation Survey, which polls over 100 economists, investment strategists, and housing market analysts projects appreciation in home values over the next five years of between 9.4% (most pessimistic) and 30.8% (most optimistic). That means that a $250,000 home today will cost between $275,000 and $325,000 in five years.
Home prices bottomed out some time ago and are now on a slow rise. According to the experts, home values will continue to appreciate for years into the future. There is no better time to buy a home in Portland Metro than right now.
Although Freddie Mac’s Primary Mortgage Market Survey indicates that interest rates for a 30-year mortgage have softened recently, most experts say that they will begin to rise again later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors all predict that mortgage rates will jump almost a full percentage point by the end of 2015. An increase of even half of one percentage point will impact your monthly mortgage payment–and even more significantly, the total cost of owning your home.
3. Either way you are paying a mortgage
According to a recent paper from the Joint Center for Housing Studies at Harvard University:
“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
Look at the actual reason you want to buy a home and decide whether it is worth waiting. Whether you want a great place to raise your children, a safer neighborhood, a shorter commute, or more control over renovations, now is a great time to buy.
If you’ve decided it’s time to buy a home in Portland Metro, making that move sooner, rather than later, could lead to substantial financial gain over the length of your home loan.
To learn more about where interest rates are headed, why there’s so much paperwork when applying for a mortgage, the financial reasons it makes sense to buy a home, and the impact of home-ownership contact me and I’ll send you a free copy of Things to Consider When Buying a Home Winter 2015.