Now that our economy is creating new jobs, (reference the October Employment Report), the demand for housing is only going to grow, and the best real estate advice is to put your plan together long before you buy a house.
After all, when young adults have jobs, they can depart Mom and Dad’s basement, and that’s a great driver for home purchases. But youth can equate to mistakes for those who are not prepared.
Most of the households created over the past two years have been renting households, but based on U.S. Census data for the 3rd quarter this year, it appears that homeownership has started to recover.
BEST REAL ESTATE ADVICE
This especially makes sense now that it is cheaper to own than rent in more than three-quarters of the counties in the U.S. And it’s not getting better— rents are rising year over year at twice the pace of listing prices. Meanwhile, mortgage rates remain at near record lows but appear poised to increase over the next year. And home prices are rising, too.
So if you qualify for a mortgage and have the funds for a down payment and closing costs—and if you intend to live in a home long enough to cover the transaction costs of buying and selling—you will be better off financially if you buy as soon as you can.
After all, if you are tired of your current home now, you won’t feel better about it in six months. Again, the best real estate advice is to be prepared before you move.
ADVICE ON MORTGAGE INTEREST RATES
Homebuyers that were in the market this past summer found pent-up demand and favorable mortgage rates and home prices. These drivers will likely remain well into next year.
Yet demand for housing is extremely seasonal. In most markets in the country, local real estate advice says to believe that we should buy homes in the spring and summer. So come each October, plans to purchase shift to the spring. While the school calendar and weather do influence the ideal time to move, many buyers would benefit from buying this fall and winter rather than waiting until next spring.
In October, the percentage of would-be buyers on realtor.com saying that they intend to buy in seven to 12 months was the highest it has been all year and represented the largest time frame for purchase. Likewise, October produced the lowest percentage of would-be buyers saying they intend to buy in the next three months.
In other words, people’s stated plans point to a very strong spring for home sales. Great, right? But here’s the problem: Real estate inventory isn’t likely to be higher in March and April than it is now. And while inventory should grow in late spring and into summer, it won’t grow as fast as the seasonal demand. In other words, today’s real estate advice is to take advantage of favorable supply levels.
There are good reasons for you to consider getting in the market now instead of early spring. You will have more choices and less competition, and you can lock in today’s mortgage interest rates rather than risk rates being higher. Just as real estate advice is critical, so too is mortgage advice. Here are 7 questions you will ask your mortgage lender, so why not prepare early with these answers?
A small rise in rates (for example, from 4% to 5%) would cause monthly payments to go much higher. And that increase would not only affect your monthly cash flow but could also affect your ability to qualify. In other words, a rise in rates will result in you being able to buy less home.
So if you are considering buying a home this spring, it’s worth exploring the inventory now and reaching out to a well-trained real estate buyer’s agent. A newly acquired home could be the best gift you give yourself and your family this holiday season.