Weather Forecast: The Perfect Storm for Home Buyers
With news all about the unstable economy on our televisions and computer, you’re probably thinking this is the perfectly wrong time to invest money into a new home. However, what’s bad for the economy is great for the housing market, creating the “perfect storm” for buying a home – now.
As you have probably read throughout the news, mortgage interest rates are at record lows, hovering around 3%. These low rates are extremely rare and don’t last very often. Although you may have noticed that rates have been falling consistently for the majority of the year now, you shouldn’t plan on waiting for them to go lower. Fannie Mae expects rates to rise by the end of the 4th quarter in 2011 and forecasts that a 30-year fixed-mortgage rate will grow to about 5.7% in 2012.
Also consistently falling lately are home prices. Due to the poor economy, home prices have been dropping and a plethora of foreclosures are dragging down our housing market. This may sound like horrible news, but it actually means that prices are currently so low that it is financially wiser to buy a home rather than renting. In response to the poor housing market, rental demand has increased over the last couple years as buyers choose to rent over buying a house. This in turn, has increased rent prices sufficiently. Mortgage experts predict that the worst of the home price decline is most likely over and that we will be moving from falling home prices to a state of stabilization in the housing market, meaning you won’t lose money when investing in your own home.
The poor housing market, dropping prices and multiple foreclosures also means one thing: less competition. Since the majority of people are hesitant to enter the housing market, you are less likely to end up in a bidding war for the house of your dreams. You’ll be able to negotiate more efficiently and end up with a better deal than you may expect.
All-in-all, the bad news that is taking over is actually good news if considering to buy a house. You can buy a home at a bargain price, have no competition when placing a bid and receive a record low mortgage rate to help you pay it off quicker. It doesn’t get much better than that for home buyers. So take advantage of the moment before this storm passes!