The American Dream of homeownership is once again a reality for those who may have been excluded from the housing market in the past. Buyers who do their homework and understand the local real estate market can avoid disappointment and be ready to close on the home of their dreams. With more buyers in the market, competition for available homes increases.
The Conditions are Right for Home Ownership
In 2018, home ownership across the nation rose to over 64 percent. Much of this increase is attributed to millennials and young adults who previously backed away from home purchases after the 2008 recession and who now find that the conditions are right to realize their dream of homeownership.
Why Buy Now
Hesitation can be costly for those entering the home buyer’s market. Several factors indicate that the time to buy a home is now rather than later.
Mortgage Interest Rates are Rising
Between September 2016 and 2018, mortgage interest rates rose from 2.72 percent to 4.11 percent. This represents a rise in costs on a $300,000 mortgage from a monthly payment of $1,220 and total thirty-year cost of $439,186 to a monthly payment of $1,451 and total cost of $522, 481. The longer a buyer waits the higher the rates will go.
Housing Supply and Pricing
Housing inventories remain low in comparison to demand. As the inventory increases, buyers may be able to find a wider selection of available homes but should keep in mind that pricing is also increasing 3.5 to 4 percent a year on average. A $300,000 home this year may be priced at $312,000 next year.
Competition
Supply and demand affect the price of goods, including homes. Real estate lawyers and brokers are seeing increased buyer competition for existing homes drive prices up. A price bidding war may be every seller’s dream, but they can be a buyer’s nightmare, taking the home of their dreams out of their price range. Buyers must be ready to act quickly when they find a home that meets their needs and price range.
The Dream of Home Ownership
As more young American households become financially secure enough to take the plunge into homeownership, the housing market continues to recover from the housing crisis. An understanding of the local real estate market conditions can help buyers find the right home at a competitive price.
