Should I Wait to Buy a Home?

What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen over the next 12 months?

According to CoreLogic’s latest Home Price Index, prices are expected to rise by 5.5% by this time next year. Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

The Home Loan Process

The Mortgage Process: What You Need To Know [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 0 – 3%.
  • You may already qualify for a loan, even if you don’t have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford
  • Our clients get the benefit of the Home Express Guarantee & the Home Express Mortgage Plan meetings that will save them time and money in the home buying process

14,986 Homes Sold

14,986 Homes Sold Yesterday... Did Yours? | Keeping Current Matters

There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is… If it hasn’t sold yet, maybe it’s not priced properly.

After all 14,986 houses sold yesterday, 14,986 will sell today and 14,986 will sell tomorrow.

That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.59 million. Divide that number by 365 (days in a year) and we can see that, on average, over 14,986 homes sell every day. The report from NAR also revealed that there is currently only a 4.0-month supply of inventory available for sale, (6-months inventory is considered ‘historically normal’). This means that there are not enough homes available for sale to satisfy the buyers who are out in the market now in record numbers.

Bottom Line

We realize that you want to get the fair market value for your home. However, if it hasn’t sold in today’s active real estate market, perhaps you should reconsider your current asking price.

Low Inventory Drives Home Pricing

Low Inventory Causes Home Prices to Accelerate | Keeping Current Matters

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price report earlier this month. The report revealed that home prices are not only continuing to rise but that the increases are accelerating. Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

“Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead.”

Here are the percentage increases of home prices for the last two quarters: Low Inventory Causes Home Prices to Accelerate | Keeping Current Matters

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by CoreLogic in a recent blog post:

“With demand strong and inventory thin, the share of homes selling for the list price or more has also returned to pre-bust levels. With inventory tight, homes are more likely to sell above the asking price.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year. However, as Construction Dive reported, the amounts of cash necessary to buy a home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line

If you’re thinking of selling and moving down, waiting might make sense. If you are a first time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

Saving More for a Down Payment

 

No one likes to have a budget – I know I don’t but the reality is that it is one of the most important financial fundamentals you need to succeed.  It is the ground work for creating Wealth.  So let me share this – think of it as a Spending Plan instead and focus your energies on spending in the right places.

Building Trust and Relationships into Homes & Great Experiences
In our business, the most profound assets that we possess are your respect and trust


thanks to the following for sharing
The Keyes Company – 
Wade & Barnwell Realty Group

Path to Create Family Wealth

 

How To Create Real Family Wealth | Keeping Current Matters

Some Highlights:

  • Buying a home is often the biggest financial decision that any family will make.
  • The average net worth of a homeowner is 45x greater than that of a renter.
  • Homeownership puts your housing costs to work for you.
  • Infographic was created in cooperation with Jensen & Co.

Net Worth 45x’s Greater as a Home Owner

Homeowner’s Net Worth is 45x Greater Than a Renter's | Keeping Current Matters

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). In a Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater. The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Homeowner’s Net Worth is 45x Greater Than a Renter's | Keeping Current Matters


Put Your Housing Cost to Work For You

Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth. The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, meet with a real estate professional in your area who can guide you through the process.