“It is important for America to realize that when it comes to housing, now is a time to buy.” ....JP Morgan
With the current real estate market conditions, most people wonder if it is a good time to buy a home. Many also wonder about Buying vs Renting a home. These are both good questions, and they are fair questions. Considering the fact the owning a home is the largest investment that most people will make in their lifetime. In this article, we will go over some of the advantages of buying a home now rather than waiting. We will also go over some facts to see if it is a good time to buy vs rent a home.
"Now could be the best time in history to buy a home" -Market Watch.com, article titled, Now Might Be The Best Time Ever to Buy a Home.
It is no secret that the price of real estate in The US has softened over the last few years. If you are considering buying a home, you may think that it will make more sense to wait, rent, or even continue to rent until the real estate market hits the bottom and rebounds. The image above shows MSN Money.com and Case Shiller's study (January 2000 to November 2011) which show that real estate still yield the highest return on investment over the stock market. So, even if home prices go down further, understand is that with interest rates at record lows, the cost of buying a home has decreased.
“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates.” -Dean Baker, Business Week article titled -Crazy home deals await the creditworthy
Here are some facts shared by our friends at Keeping Current Matters in a recent blog post as they compared the difference in monthly cost on a home purchased for $250,000: "According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling. In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home?"
As you can see, it is important not to just look at price, but rather consider the cost of owning a home in today's housing market. Hopefully, we are not expecting interest rates to stay at these record lows forever because they won't. Once interest rates go up, so will the cost of owning a home.
“It's an excellent time to buy a house, either to live in for the long term or for investment income.” ... Wall Street Journal
Unless someone is still staying at home with their parents, most people already have a housing (rent) expense. What you have to decide is, does your housing expense go up or down if you buy a home. The image below shows a Forbes.com research on Housing Cost Over the Next 30 years if you get a normal fixed rate mortgage vs. renting at a normal annual appreciation of 3.2%. Forbes estimates that in 30 years, the renter would have paid $900,000 vs. $540,000 for the buyer with a normal fixed rate mortgage. Also, if the buyer bought a $300,000 home, at an annual appreciation rate of only 1%, they would have a $400,000 retirement fund created from their equity after 30 years vs. $0 for the renter. How many landlords do you know that will give you your money back after 30 years?.
“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.” -Capital Economics
“By the 3rd quarter of this year, we estimate that the implied median mortgage payment had fallen to just 78% of the median asking rent…” - JP Morgan
Waiting to get a better price on a home could end up cost you more when you finally buy a home. Along with the other costs is also the cost paid in rent while you wait. After adding up all the costs, how much will you actually be saving by waiting?
“My answer to those who ask whether now’s the time to buy a house is that the American Dream is and always was alive and well. It has nothing to do with the direction of housing prices but everything to do with your financial situation, income stability, ability to shoulder the costs, and if the home you have your eye on is your version of the American Dream— a home you love that you hope to live in for an extended period.” Forbes.com
If you are considering buying Greater Greenville SC real estate, contact us at 864-642-1645 to discuss your needs and the incredible opportunities that Greater Greenville SC homes for sale have to offer. Our goal is to continue to become your trusted real estate expert advisor.
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Resources: KCM, Forbes.com, JP Morgan, Capital Economics, Business Week, Wall Street Journal
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