Buying a home is one of the biggest and most important decisions anyone can make. As economic conditions change, now could be the right time to invest in a property. It all depends on your situation.
Despite a temporary decrease in consumer confidence, there is still a wide range of housing options on the market. Because of these circumstances, property prices have fallen in many areas, making it possible to secure an attractive and desirable home for less.
Similarly, government branches and financial institutions have introduced various loan programs and incentives to encourage people to commit to homeownership. Builders across the nation are eager to sell new homes around attractive metro areas with multiple perks and discounts. With winter on our doorstep, the climate is ripe for buyers to enter the market.
But what about interest rates?
Admittedly, interest rates have been going upward for the last couple of months. Currently, as Bankrate reports, mortgage rates range from 6.04-6.67%, depending on the timeframe commitment. However, the mantra for next year is problematic, as experts forecast a continuation of upward movement.
With this in mind, current rates can seem somewhat forgiving. Indeed, when combined with incentive programs provided by governments, lenders, and builders, it is much easier to embrace the rate as it is currently.
Lower prices of homes
While some would argue that seasonal shifts in price movement affect the market more than anything else, there is a case to be made about reaching historic lows. The market is slowing down from the upward momentum perspective. If that is the case, acting now might prove advantageous.
According to Redfin, the median price of homes in metros like Phoenix is steadily increasing. Currently, at 7.5% year-over-year, the market is responding positively to the temporary autumn plunge. When we observe the historical chart, the seasonal dip stands against a constant upward curve. If this is genuinely the reversal everybody has been waiting for, it is wise to enter the market, especially if you don’t need to secure a mortgage or if you find a home builder with incentives that help keep your monthly payments low.
An evident decrease in housing starts.
The data on US housing starts records 1.425M construction efforts in the residential sector. Comparatively, this number is down from 1.488M last month and from 1.563M year-over-year. To put it in perspective, the trend observes an 8.83% decrease annually.
With fewer construction starts, it is reasonable to assume that we will face an eventual scarcity. As real estate agents and builders list fewer properties on the market, the prices are poised to increase steadily and perhaps even dramatically. Remember - houses take time to build, so taking note of construction starts is an excellent method of timing your market entry.
Houses might act as a hedge against inflation
Irrespective of temporary price dynamics, houses always seem to recover once the economic circumstances improve. Unfortunately, we cannot say the same for other assets, where economic turmoil might prove detrimental to their long-term survival.
Similarly, properties have a tangible aspect, which is easy to employ. Indeed, even in the direst economic circumstances, people need a roof over their heads, so investments in homeownership can quickly yield profit via rent. Often, the amount is enough to contribute toward mortgage payments, helping you stay afloat even during unprecedented global turmoil.
Seasonal considerations
The cold season is favorable for buyers. Apart from the evident price decrease, buying pressure lifts off, and winter months become saturated with offers. Lenders are lenient towards clients with lower scores, and builders are willing to cover closing costs or provide additional perks to sweeten the deal.
Similarly, moving companies, supplies, and storage are underbooked and abundant. The circumstances don't make a monumental difference, but you'll find convenience and practicality and save a couple hundred dollars.
In conclusion, current economic conditions suggest that now may be the right time to buy a home. With mortgage rates still relatively low, plentiful housing choices, and generous incentives, there is certainly potential for a great deal. With so many unpredictable events and complex variables in the global economy, now may be the perfect time to act.
Ultimately, individuals should decide via careful consideration of their financial capabilities and a thorough analysis of the current market. They should not substitute this article for financial advice but see it as another perspective or point of consideration.
