3 Powerful Reasons to Buy a Home Now
Are you a first-time buyer or looking to move up to the home of your dreams? Well, now is a great time to purchase a home. Here are the top three reasons why buying a house now makes sense.
Lots of people focus on price when talking about home affordability. Since home prices have appreciated throughout the past year, they assume homes are less affordable. However, affordability is determined by three components:
- Mortgage Interest Rate
Prices are up, but so are wages – and interest rates have dropped dramatically. As a result, the National Association of Realtors’ (NAR) latest Affordability Index report shows that homes are MORE affordable now throughout the country than they were a year ago.
“All four regions saw an increase in affordability from a year ago. The South had the biggest gain in affordability of 6.9%, followed by the West with a gain of 6.0%. The Midwest had an increase of 5.8%, followed by the Northeast with the smallest gain of 1.8%.”
There’s no question that the rate at which home prices have risen is slowing down. Last year, we had only two months worth of inventory at any given time. A far cry from the normal and healthy six months worth of inventory and home prices were crazy high.
Now in 2019, we are seeing inventory numbers creep up to four months worth of inventory which is slowing down home appreciation rates slightly. Next year, it’s anticipated that housing inventory will recover to its six-month norm and home prices should level off. However, will interest rates start to climb?
Mortgage Interest Rates
Mortgage rates have dropped almost a full point after heading toward 5% last Fall and early winter. Currently, they are just below 4%.
Additionally, Fannie Mae has predicted the average rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019. That compares to a 4.4% national average rate in the first quarter and 4% in the second quarter.
With mortgage rates remaining near historic lows, Fannie Mae and others have increased their forecasts for housing appreciation for the rest of this year. The little you MIGHT save on home prices next year could be negated by higher interest rates which you pay over 30 years.
Homeownership has always been recognized as a rock-solid way to build long-term family wealth. A new report by ATTOM Data Solutions reveals:
“U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since purchase of $67,500, up from an average gain of $57,706 in Q1 2019 and up from an average gain of $60,100 in Q2 2018. The average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of original purchase price.”
The longer you delay purchasing a home, the longer you are waiting to put the power of home equity to work for you, the longer it will take to pay off that home.
Homebuyers who bought their home while in their twenties in the 1980s, have either paid off their mortgage or have less than $10,000 left on it today. Those who forestall the purchase of a home into their late thirties or early forties could be pushing 70 by the time they fulfill their mortgage commitment.
Renting on a fixed income during your twilight years is not ideal. In fact, more often than not, it’s a hardship you can avoid if you act now. Homeowners who bought in their 20’s or early 30’s are in a much better place financially when they reach their late 50’s and 60’s.
Consider that most mortgages run for 30 years if you buy when your 30 years of age your home will be mortgage-free by the time you hit retirement age. That’s a very good position to be in. Now compare that to others who wait longer to purchase their home and who will still be paying a mortgage well after their 60’s.
With affordability increasing, mortgage rates decreasing, and home values about to re-accelerate, it may be time to make a move. Let’s get together to determine if buying now makes sense for you.
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