Recently I was asked why it would be better for someone to buy a home right now rather than continue to rent. People often forget that real estate is cyclical in nature and will most likely always be. Rent prices also fluctuate and are currently incredibly high making housing options unaffordable and difficult to find. Construction of new apartment communities is booming but rental prices are much higher than they should be. The average rent for a 1 bedroom lies around $1650! That's money going directly into someone else's pocket and you have no ownership. Not to mention, at the end of your lease, you may be surprised with a rent increase causing instability in your housing situation.
Though it's true that interest rates have climbed and caused a bit of a shock to would be homebuyers, it is important to recognize that it wasn't realistic to assume they would remain that low forever. We are beginning to see more stable interest rates and though they aren't at 3% anymore, they are still lower than they have been historically. It's an adjustment that we will need to get used to but we just need to remember that rates were around 5% to 6% not long before they dropped.
The plus side for buyers looking to enter the market now is that incentives have returned, it is okay to ask for closing costs again, you CAN have all of the contingencies in place that keep you protected, you have more time to make a decision that you had before, financing options have broadened and there are more options now than there were including zero down options for some! When looking at what you can afford the most important number is the monthly payment. Prices in our areas are higher than they were 3 years ago but they have stabilized and will keep stabilizing through the winter. We won't see 2019 prices again but we are finally seeing the correction we needed to see in the market where home prices are more realistic and in line with what they should be.
Pros and Cons of Ownership
How can you tell whether owning a home would benefit you? A good way to find out is by considering the ways homeownership can affect your life.
• Build equity — your wealth will increase as you gain more home equity
• Gain tax advantages — mortgage interest is tax deductible as per IRS code
• Stabilize your payments — monthly payments are relatively steady if your loan has a fixed interest rate, while your landlord can increase the rent
• Have a secure place for your family to live — a home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home
• Gain a sense of community — homeowners often are more involved in the well-being of their communities; many homeowners work together for better schools and less crime
• Maintenance costs — it takes work and money to keep a home in good condition
• Ties up your cash — selling the house may not be possible during the first few years of ownership; moving is more difficult and complicated and you may not have as much flexibility in choosing a new job location
• Can fluctuate in value — there is no guarantee that your home will increase in value; it could decrease in value
• Obligates your finances — when you buy a home, you are obligated to a set monthly payment
Though these are not the only factors to consider when you are trying to decide whether to buy or rent, they are helpful at beginning to determine which decision is best for you and where you are right now. Home ownership has great rewards, a sense of accomplishment, and a place to call your own. Along with those rewards comes great responsibility. Renting allows you flexibility to move with minimal notice, no maintenance or repair costs and a place to rest your head, yet there is still something about that phrase, "There's no place like home".
For more information on purchasing a home or to determine if home ownership is right for you, CONTACT ME.