Now is Still the Time to Buy

Was buying a home cheaper six months ago? Yes. Is it still a great time to buy a home? Yes.

Limited inventory and rising prices have created a seller’s market and buyers are competing fiercely for homes, even to the point of bidding wars sometimes, but that doesn’t mean that it’s still not a great time to buy a home.

Here is why:

Home Prices Are Still Rising. Because the housing market bottomed, reaching its lowest point in March of 2012, the price gains seen recently still leave plenty of room for the home values to climb. What is causing the rising prices? Lack of supply, which is the result of slower homebuilding activity, diminishing foreclosures, and sellers slow to come to market while waiting for prices to increase further (much of this is because sellers who purchased during the height of the market owe more on homes than the current value).

Rates Are Low By Historical Standards. Home mortgage rates are still far below the normal average. Although they have increased by a full percentage point since May, they are still lower than just two years ago and far lower than the long-term average of about 8 percent.

Getting A Home Loan Is Somewhat Easier. Because of the rising interest rates, fewer people will be refinancing.

Owning A Home Is Still a Better Option Over Renting. Even taking the recent price and rate increases into account, it is cheaper to buy than to rent in many real estate markets. Nationwide, assuming a buyer stays in a home for at least 7 years, it is 37 percent cheaper to buy than to rent. Owning, rather than renting, is generally a smart move because you build equity and appreciation over time.

Investor Competition Is Decreasing. Many of the factors stated above are driving investors out of the market. The reduced amounts of foreclosures coupled with rising prices are making investors lose interest. Many investors are recalculating their numbers, because it might make less sense for them to buy in order to flip or rent now. That may be an opportunity for primary owner-buyers to have less competition.

Ron Jordan, senior vice president of mortgage lending at Bell State Bank & Trust says, “As you can see, it’s still a great time for buying a home. But make no mistake, prices are still increasing and rates may as well. The sooner you can buy the better.”

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