Doesn’t that headline make me sound like a pushy salesman?!?! Deciding the right time for YOU to buy a house is extremely personal. It is about where you are in your life. Are you financially ready? Do you need more (or less) space? Are you planning to live in the same place for years to come? Do you have the time and energy to take care of a home? If you feel you are ready and in the right mindset to buy a house, here are three reasons it is better to buy sooner rather than later:
1) Rents are rising at a pace that far exceeds income growth. This article paints a dismal picture of the fact that in Seattle (and Portland) the rents have gone up almost 20% since 2007, with wages staying flat. That makes renting an apartment even more of a financial burden than ever before. And with the continuing shortage of rental units, prices can be expected to continue to rise.
2) Mortgage rates are only expected to climb. Yes, you missed the days of the 3.5% loan. And that’s a bummer. With the Feds recent announcement that they will refrain from any major policy changes, the interest rates have become a bit less volatile (as of today, the average rate for a 30 year fixed loan is 4.5%). We can speculate on how long these rates will last, but the general consensus is that, just like rents, they rates are only going to rise. And the impact of just 1% increase in mortgage rates can have a substantial impact on your purchasing power.
3) Home prices are on the rise. While home values have been increasing 3% – 5% per month here in Seattle, that trend is expected to continue, but a slower (and more reasonable) rate. To put that into hard numbers, that means that a house you would buy today at $400,000, might likely cost $425,000 in Spring of 2014. Is it worth $25,000 to you to wait for 3 – 6 more months?
If, and only if, you are ready to buy, now is likely the best time.