4 Reasons You Should Buy a Home Before the New Year
October 22, 2013
Thinking about buying a home? Now that the government shutdown has ended the market has picked up, but there are still many home buyers once again weighing their options on whether they should buy a home now or wait. The fact is, the next 60 days is one of the best times to buy a home that we’ve seen all year. In fact, waiting to buy a home will likely cost you in the long run. We’ve outlined 4 definitive reasons you should buy a home in the next 60 days rather than wait.
1. Interest Rates Are Dropping and Are Expected to Come Down More
Last week, interest rates hit a 4-month low. As we showed last month in our interest rates update, we expect rates to go lower before the year ends. Historically, interest rates tend to dip to their lowest level during November and December. This has a huge impact on home affordability for buyers. For instance, when the average conventional rate last month reached 4.85% a monthly payment on a $350,000 loan would have been $1,662. As of today the rate has dropped to 4.27%, reducing the monthly payment to $1,555, a difference of over a hundred dollars a month. We expect rates to get down to at least 4% or even the high 3% range by the end of the year.
2. Housing Inventory is Up 3% Since the Summer
As of October 21, there are 25,162 homes for sale on the market in Massachusetts, an increase of 3% compared to July 21. Over the summer inventory was down which contributed to an increase in home prices. With more homes on the market right now the prices have stabilized and are not going up as much as in the spring, allowing you to get more home for your money. Of course with more homes on the market you’ll also have more homes to choose from.
3. Competition is Down
For the next 60 days there won’t be as many buyers looking for a home as there will be next spring. This gives you an added advantage since with fewer buyers looking and making offers you won’t be competing with them. You won’t have to go through as many back and forth negotiations and will have a better chance at having the upper hand when it comes time to make an offer. An added benefit is with more homes on the market there’s less risk of getting into a bidding war over the home you want.
4. Rents Continue to Rise
Trulia recently reported that Boston was one of the most expensive rental markets in the country and also showed had one of the largest increases in monthly rents compared to 2012. With low interest rates, in many areas of Massachusetts owning a home is actually more affordable than renting. According to RentJungle, the average monthly rent for an apartment within 10 miles of Boston is $2,324. With today’s low interest rates a monthly payment on a $350,000 home would be well under what you would pay for rent in the metro Boston area. We expect rents to continue to increase in 2014.