To rent or to buy! How to decide? It used to be a given that you would buy a home as soon as you could afford to –but in the face of the housing market’s big bust and slow recovery, this has become an agonizing decision for many would-be homebuyers. Low prices seem to create a wide-open window of opportunity, but they also create the concern that prices will keep falling after closing – a fear that has thousands of buyers stuck on the fence, uncertain which direction to take.
However there are some signals in the market right now which indicate that the time is right to get off the fence and buy now:
Rising Mortgage Rates. Home prices have been low for the last several years, and in fact are currently looking like they’re heading back down to the same levels they were at during the depths of the real estate recession. During this same time frame, interest rates have also been low, which has created record-high affordability for the last few years, causing buyers to believe that this window of opportunity won’t be closing anytime soon and thinking they should wait till the market ‘bottoms out’!
Interest rates are an important consideration though. Rates have been all over the place for the past few months and, with inflation and Fed rates set to spike later this year, today’s low interest rates might be as good as they’re going to get for a long time to come.
Mortgage rates on the rise are one signal that now might be the peak of home affordability.
Rents are going up. Rental rates are also on the rise – just take a look today’s Sun-Sentinel and see what many are facing. The fact is that the foreclosure crisis has actually placed increased demand on the rental market, reducing the number of homes available for rent. Many former homeowners who lost homes to foreclosure now need to rent. Additionally, buyers have been hesitant to buy and many have elected to stay renters until they are more comfortable with the stability of property values. Lending guidelines have also become far more restrictive, preventing many potential buyers from being able to get a mortgage. All of this has increased the demand for rental homes dramatically, causing rental rates to go up.
So with rental rates going up and home prices at an all-time low we see one more signal that now might just be the perfect time to buy.
The fact is if your career and income are stable and you expect to be in the home for at least 7-10 years, you are most likely better off buying a home than renting!
Check in with a mortgage expert and your financial planner; talk to a Realtor who is an expert in your area and discuss your personal situation and needs. Buying a home is a major decision – one that creates stability for your family and an investment in your future.
So, don’t stay on the fence, trying to ‘time the market’! Opportunity may just pass you by…