Many potential home buyers and sellers have been holding off getting into the housing market. But now could be the right time to get off the sidelines and into the game. Here’s why:
1. Prices continue to recover. A major real estate data provider recently reported 28 months in a row of year-over-year gains in home prices nationally. That should alleviate buyers’ worries about prices going in the other direction.
2. Homes are still very affordable. Freddie Mac, one of the government sponsored enterprises that stands behind a majority of mortgages, says that the monthly mortgage payment-to-rent ratio is close to the lowest it’s been in more than 35 years. That means homes remain very affordable.
3. Rents keep rising. A major real estate analysis firm reports that because “rental demand is rising while supply is dwindling…rent prices will continue to climb.” This makes home buying a very smart idea for renters.
4. There are more choices for buyers and more buyers for sellers. As more sellers put their homes on the market, buyers get more options. sellers benefit too as more available choices bring more interested buyers.
5. Mortgage rates are near historical lows. But buyers should note that rates won’t stay low forever.
6. You need less down payment than you may realize. Freddie Mac wants potential buyers to know that down payment requirements are not as high as they may think. In fact, more than one in five borrowers who took out conventional mortgages this year put down 10% or less.
7. More people are qualifying for mortgages. A recent report from industry analysts noted ” a slow, steady easing in credit standards.”
8. A home is still a very smart investment. Billionaire money manager John Paulson said in an interview: “I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that your’re the owner-occupier of. Today financing costs are extraordinarily low…and today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage the cost is fixed.”
Author: Guild Mortgage Company Media Center 2014