If you are considering buying a house to live in, now might be a good time to start looking. Rates are low now but they won’t stay this low forever. There is no telling when rates will climb of course; but why take a chance? There are a number of reasons why I feel it still makes sense to buy property for the right person in the right situation. *Notable exception – if you have bad credit, you might be able to buy property but it could be a very bad move.
The Future Looks Promising For Real Estate
I don’t know if we’re going to see the impressive real estate gains we saw from 2009 through 2014, but the fundamentals are still strong.
According to CoreLogic, here’s what those fundamentals are:
- The American economy is expanding.
- Home sales should increase by 9% this year as will housing starts. Home prices are expected to rise also.
- Because of low supply and little construction, appreciation is expected to be strong in the lower-end home price range in the top 25 markets.
- First-time home buyers’ employment is growing. This should lead to greater overall economic growth as people in this age group (25 – 29) tend to spend more as a percentage of their incomes than older people.
- Energy costs have fallen 45% since mid-year 2014. Since consumers spend about $1800 a year on energy, that savings puts a lot more spendable cash in their pockets and that is an additional boost for our economy.
While there are plenty of reasons to be optimistic about real estate right now, there are still areas of concern:
Prices are much higher than they were only a few short years ago. When lenders look at potential buyers, they consider your income to mortgage ratio. As prices rise faster than incomes, the ratio gets lower and that’s not good. Over time, that means lenders may grant fewer mortgages and that means buyers will not be able to buy. It also means that prices may not appreciate as quickly as they have up until now.
Caution – If you are considering buying a property with a friend slow down. There are some advantages to this I grant you that. But the dangers of doing this are far greater.
Location Location Location
Real estate is all about location. If you are considering a home purchase, take a good look around at the local economy. If you are in a market that has a very diverse economy, you’ll probably be fine. But if most of the local businesses are energy based, for example, housing prices could suffer if energy remains cheap and those companies have to downsize or close their doors.
If you can afford to buy a home and plan on living in it for awhile, it makes sense to consider buying now. Renting might be a better financial move but if you want to buy a home for other reasons, I’d get to it. Of course I can’t guarantee what’s going to happen to home values and you to be very aware to the specifics of your market and your own personal financial situation too.
Are you buying a home now?