If you are considering purchasing a home right now, you’re probably receiving a lot of advice and information. Although your friends and family will have your best interest at heart, they may not be completely aware of your needs and what is currently occurring in the real estate market.
Asking yourself the following 3 questions could help you determine if now is a good time for you to purchase a home:
1. Why are you buying a home?
This should be the most crucial question to answer. If you put aside the financial investment, besides money, why did you start to consider purchasing a home? For most, the reason has little to do with finances.
Research by the Joint Center for Housing Studies at Harvard University revealed that the top four reasons Americans buy a home have more to do with family and less to do with money.
The top 4 reasons why Americans are buying homes are:
-A good place to raise children and for them to get a good education
-A place where you and your family feel safe
-More space for you and your family
-Control of that space
What does owning a home mean to you? What non-financial advantages will you and your family gain from owning a home? If you are starting or already have a family, the answer to that question should be the most significant reason why you decide to go ahead with the purchase of a home or wait until you’re ready.
2. Where are home values headed?
According to Zillow, The median home value in Seattle is $609,100. Seattle home values have gone up 11.3% over the past year, and Zillow predicts they will rise 4.7% within the next year. The median list price per square foot in Seattle is $418, which is higher than the Seattle Metro average of $205.
If we look at the estimates year over year, a home that would cost you $600,000 today, might cost you an additional $20,000 if you wait until next year.
What does that mean to you?
Simply enough, with home prices increasing each month, it might cost you more to purchase your home the longer you wait to buy one. Your down payment will also need to be higher to account for the higher price of the home you wish to purchase.
3. Where are mortgage interest rates headed?
Buyers should be concerned about more than just home prices. The “long-term cost” of a home can be significantly impacted by even a small increase in mortgage rates.
The Mortgage Bankers Association (MBA), the National Association of Realtors, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months.
This rise in mortgage rates will affect how much financial investment you put in your home.
The purchase of a home shouldn’t just be a financial decision; you have to be ready for the changes that it could potentially bring to your family life.