To Buy Or Not To Buy, That Is The Question

If you are debating purchasing a home right now, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and/or what is currently happening in real estate.  So, is now is actually a good time for you to buy a home?  To answer that one question, there are 3 more you need to answer first!

1. Why am I buying a home?3-Questions-KCM

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances.

A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home actually have nothing to do with money.  The study found what people “really, really want” is:

  • 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 non-financial benefits will you and your family derive from owning a home? There are generally A LOT, and they will be the biggest reason you decide to purchase or not.

2. Where are home values headed?

This is and has been one of my biggest concerns for my buyer clients in this sellers’ market!  When looking at future housing values, Home Price Expectation Survey provides a pretty fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

Here is what the experts projected in the latest survey:

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • Even the most bearish (love that word, don’t you?) experts in the survey still are projecting a cumulative appreciation of over 10.5% by 2019.

So what does that really mean for you and your family?

The chart below was made using the Home Price Expectation Survey’s predictions:

Homeowner's Family Wealth Over the Next 4 Years | Keeping Current Matters

If the experts are right and you were to purchase a home by January 2016 for $250,000, that home would appreciate by over $34,000 over the next four years! This means that homeownership is and continues to be one of the best ways to build your family’s wealth.

3. Where are mortgage interest rates headed?

A buyer must be always be concerned about more than just house prices…the ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.  In a word, mortgage rates are headed UP; I predicted that at the beginning of 2014.  BUT this doesn’t mean it’s not a good time to buy a home, because current rates are still at historic lows.

The Mortgage Bankers Association (MBA), the National Association of Realtors and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months as you can see in the chart below:

Mortgage Rate Projections | Keeping Current Matters

Bottom Line

Answering these questions will help you answer that ultimate question, “is now the right time to purchase a home?” For great advice (if I do say so myself) and/or if you just want to ask some general market questions, please don’t hesitate to get in touch!

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