Home Ownership NOW, without Regretting your Decision!
So many signs indicate that potential buyers stand to lose out on the benefits of homeownership if they wait too long into 2015 before signing that contract. Forget the traditional attractions of home ownership, i.e., “The pride of Home Ownership”, “The tax break you get with interest costs”, “Build Equity”, etc., as we enter 2015 one can argue that in terms of home prices, interest rates, supply and demand conditions, we may not see a better set of conditions favoring home buyers, and eventually home sellers for a long time.
- Those rock bottom prices have hit rock bottom: Distressed properties comprised 35% of all home sales in January 2012, in October 2014 that number had declined to 9%. The entire Southeast region has seen a 4.66% home price increase this past year, and although Virginia lags a bit behind that average, prices for closed home sales have increased. From the most pessimistic to the most optimistic forecasters for home values over the next five years ranges from a low 15% to a high 0f 32%, or anywhere from 3% to 6% annual increase in home values-a pretty good investment in today’s economy. In fact in Locust Grove, VA., the median sales price for homes sold increased 5% from January to November this year; a trend that is highly likely to continue.
- These low interests are NOT going to continue: There is a consistent opinion from the Federal Reserve down to the mortgage companies regarding the likelihood of an increase in interest rates. As is often said, “It’s not a question of if, but when and how much!” With 30-year fixed rates still below 4%, it is clear that will become a thing of the past. The Big Four’s average projection for year-end interest rates is 4.98%, with some forecasts to be even higher. This represents an increase of over 1%, which on a 30-Year fixed loan for $200,000 translates to approximately $120 per month. If rates climb even higher, the affordability of the home of your choice is at risk.
- Supply and Demand is Key: Lower fuel prices, increasing employment numbers and rising incomes add to the demand for all goods, including the purchase of homes. In most markets, listed home inventories are at some of the lowest levels in years. With demand high and supply low, home prices are likely to increase at an even greater rate, thus combined with higher interest rates, the longer one waits the fewer options they will have for the home of their dreams. Currently the rental markets are robust; with rising rental costs the relative cost of home ownership becomes more attractive. As new purchasers enter the market, some victims of short-sales or foreclosures of their own and have sat-out due to these financial hardships, and other renters realize this home ownership “perfect storm” may escape them if they don’t act now, demand will increase even more dramatically. These conditions may encourage resurgence in the “Move-up” buyer, something missing since the bust, but could influence the supply and demand to create the real estate market conditions all realtors have hoped would return at some point.
The Bottom Line is NOW is the PERFECT time to Buy a Home! Contact the Ostlund Team Realtors and find out about our “Cash Back to Buyers” Program.
Dr. Charlie Ostlund-REALTOR, ABR, SRS, MRP