Of course people think that Real Estate Agents just want people to buy so they can make money, but I just want to share what is actually happening in real estate…and why right now really is a GREAT time to buy/or to “move up” if you are in a position to do so. Additionally, if you are thinking of selling, it is a great time now as well in Northern Virginia (contrary to what the news is saying). In Northern Virginia we actually have a shortage of inventory meaning buyers are competing over houses. The buyers are out because of the great interest rates, so it is a great time to put your house on the market. We currently only have about a 3 month supply of homes when a stable market calls for a 6 month supply. Anything over 6 months is a buyers market.
Here is some great info from Weichert Insigts that I wanted to share. It offers a great illustration of what todays prices and interest rates actually mean to the cost of a home now vs. later. This is great news for buyers AND sellers…that doesn’t happen often, so take advantage. Enjoy!
Waiting Doesn’t Make Cents!
Historically low-interest rates and attractive home prices have combined to make the current housing market one of the most affordable in decades. While patience can sometimes be a virtue, for those who think a home purchase is in their near future, waiting just doesn’t make “cents”.
For example, the monthly payment to purchase a $300,000 home with 10 percent down and a 30-year fixed mortgage at an interest rate of 5 percent would cost $1,449. Yet, if rates rise to 6 percent and home prices increase 5 percent, that same purchase would end up costing an additional $3,000 a year.
Figures from the National Association of Realtors shows the favorable gains that recent first-time buyers have enjoyed in housing affordability. The average sale price of a typical starter home dropped nearly 24 percent from 2007 to 2010. That equates to a savings of $40,000 on the purchase of a home.
The same report shows that interest rates dropped from approximately 6.5 percent to under 5 percent to make a home purchase even more affordable. As a result, a first-time buyer’s monthly payment dropped nearly $400 from $1,083 to $709 and the income needed to qualify to purchase a starter home dropped from $52,000 in 2007 to $34,000 today.
While holding off on buying might have been a good strategy a few years ago, today’s market conditions are just too favorable to wait for a better opportunity that isn’t likely to come. With home prices appearing to stabilize or increase in many markets (including many areas in Northern Virginia), and with signs pointing to interest rates on the rise, it seems likely that a home purchase will cost more in the future than it does today.