5 Reasons You Should Buy Now
There are many factors that determine if buying is better than renting, such as how fast home prices and rents rise and how long you plan to stay in your home. Here are 5 reasons you should consider buying a home now. Base on home prices, mortgage rates, and soaring rents, there has never been a better time to buying than right now in Charleston, South Carolina.
1. The Supply is Shrinking
- In 2011 there were a total of 15,272 homes listed in the Tri-County MLS of which 8,993 sold. 41% of the homes listed did not sell.
- In 2012 there were a total of 15.550 homes listed in the Tri-County MLS of which 10,245 sold. 34% of the homes listed did not sell.
- In 2013 there were a total of 17,792 homes listed in the Tri-County MLS of which 12,496 sold. 30% of the homes listed did not sell.
Image 1.0 in the slideshow gives you a 9 year overview of the of the homes listed verse homes sold.
If this trend continues and the variance between the homes listed and homes sold shrink, the result is increase home prices.
2. Home Sales Prices are Increasing
The number of homes sold in the past 3 years have increased 8% per year. The average sales price and median sales price has also risen by 13% and 14% over the past 2 years respectively. See Image 2.0 in the slideshow.
With the tends increasing, this makes for a sellers market. A survey completed by a nationwide panel of economists, real state experts, and investment strategists on where hope prices are headed over the next 5 years. The results are that home prices are projected to increase 28% over the next 4 years. Waiting to buy will cost you more money and with projected interest rates increasing you could find yourself looking in the less desirable areas because of affordability.
3. Owning a Home Creates Wealth
Over the last several years, homeownership has lost its allure as a financial investment. With the crash of the housing market many people began to question if owning a home was a good financial investment. The Federal Reserve did a study on the homeownership’s impact on net worth and this is what their report revealed:
- The average American family has a net worth of $77,300
- Of that new worth, 61.4% ($47,500) of it is in home equity
- A homeowner’s new worth is over thirty times greater than that of a renter
- The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100
- The bottom line is that the Fed study found that homeownership is still a great way for a family to build wealth in America.
4. Interest rates are Projected to Rise
The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the end of 2014. That is an increase of almost on full point over the current rates. Here’s an illustration of what impact an interest rate increase would have on a mortgage payment of a selling home for $250,000 even if home prices stay the same. See Image 3.0 in the slideshow.
Waiting to buy could increase your monthly payment by at least $151 a month. Over 30 years that’s $54,360 you would lose out on.
5. Buy Low, Sell High
Most would agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Today, real estate is selling low compared to where it will be next year. It’s time to buy now.
I found a great tool to calculate owning verse renting. Click here to check it out.
The information from this article was obtained by Keeping Current Matters.