Summer’s the season we’ve all been looking forward to. Homebuyers who put their house-hunt on hold are returning to the market.
If you’re ready to move, it can help to answer this question: Are you better off waiting out the season, or is now a good time to buy?
4 Things Every Homebuyer Needs to Know About This Summer’s Housing Market
You may be a renter ready to put down roots and start building your equity, or maybe you’re a homeowner ready to switch out your starter home for your forever place.
If so, keep in mind that:
1. Housing prices could still increase.
Available homes for sale are in undersupply as the economy begins to recover in the second half of 2020. Due to this tight inventory, home prices may rise as homebuyers reenter the market. The National Association of Realtors’ chief economist Lawrence Yu confirmed a projected median home price increase of 4 percent for 2020, on par with years past.
Home values are expected to go up again. Waiting to buy could cost you.
And because housing inventory is 23-percent lower than it was a year ago: When you find a home you’re interested in, it’s a good idea to act quickly.
Be home in 10? Once you find your dream house, you could close in as few as 10 days.
2. Mortgage rates should stay low.
Triggered by the economic changes caused by the pandemic, mortgage interest rates have recently hit historic lows. The Primary Mortgage Market Survey from Freddie Mac indicates that rates for a 30-year fixed-rate mortgage have plummeted to about 3.13 percent. Freddie Mac’s recent Housing Forecast projects rates as low as 3 percent by the end of 2020.
Your monthly mortgage payment is directly impacted by every mortgage rate decline. So, buying a house at today’s low rates could make your monthly housing cost decrease.
3. You’re always paying someone’s mortgage.
Many renters haven’t taken the plunge and bought a house yet because they’re not comfortable taking on a mortgage. But unless you’re living with friends or relatives rent-free, you’re going to be paying somebody’s mortgage — your landlord’s or your own.
When you own your home, your mortgage payment works like a “forced savings plan,” allowing you to build your own equity that you could cash out in the future. When you’re renting, you’re contributing to your landlord’s equity and can almost guarantee that their worth will increase.
Buying a home puts your monthly housing cost to work for you, not someone else.
4. Count the true cost of waiting.
The cost of owning a house comes down to two main components: a home’s price and today’s mortgage rate. Home prices are soon expected to increase.
If they weren’t, would it still be a good idea to wait?
Ask yourself the real reason you want to buy a home. This can help you decide if it’s worth it. You may want a better location, like 75 percent of today’s homebuyers; a good neighborhood (64 percent); a bigger house (60 percent); a better layout of your home (41 percent); or a different school district (37 percent). If any of these benefits ring true, now may still be the right time to buy.
More house, less monthly payment please
All signs point to a great opportunity for this summer’s homebuyers. With mortgage rates low and home prices holding steady for now, you could buy a bigger home — or a house in a better location — without changing your price range or your payment. In short, you may get more for less by buying now instead of later. Connect with a local loan officer remotely.