The subject of renting is always a hot topic, especially now. No one expected a pandemic to come sweeping through and shake up the housing market like it did.
It is smart to look at the whole picture when deciding if you should buy a home now or wait. There is a lot to consider: Both the economy and real estate market come into play, in addition to your personal finances.
Buying Opportunities
As the pandemic continues, it may appear that renting is your best bet. This may be true in the short-term in certain housing markets, but over the next few years you could really miss out on having a house as an investment.
Trying to predict if home prices will rise in your local market is a hard game to play. But we are seeing that in most of the United States, the housing market is continuing to gain momentum. This is great news!
While we are all still trying to figure out what this health crisis means across the country, it is clear the real estate market is in better shape than it was when we experienced in 2008 during the Great Recession.
Rent Is Rising
Rent is rising across the U.S. In many cities, affordability just is not an option anymore. National rents increased 1.4% from last year and it was much worse on the lower-priced end of the housing market.* The jump was worse in places like Phoenix, Seattle, and Las Vegas according to CoreLogic.
In fact, the average millennial will spend $93,000 in rent costs by the time they are 30 years old. **
Other housing markets that are experiencing a large uptick in rents include**:
- Mesa, AZ
- Charlotte, NC
- Atlanta, GA
- Boston, MA
- Orlando, FL
- Louis, MO
- Colorado Springs, CO
- Nashville, TN
- Tampa, FL
- Henderson, NV
- Greensboro, NC
- Austin, TX
- Los Angeles, CA
Your Buying Power
There are many factors that can affect how much you pay for a house, but the main two are:
Look at Your Personal Finances
As you are weighing your options of renting versus buying a home, you need to get a clear idea of what the total cost of the home will be. This is important when you are deciding if you should buy now or wait.
If you want to see what a monthly mortgage payment means for your lifestyle, we recommend you give it a try first. Think about your current rent payment. If your new loan payment is going to be higher, put the difference into a savings account on the first of the month to simulate making your new mortgage payment. Once you’ve test driven your estimated mortgage payment, ask yourself if you can make those payments work.
Quick tip: It is also important to think about how much money you would like to put toward your down payment when looking at your personal finances.
Buyer Beware
Many lenders are just trying to get you to sign on the dotted line and want you to overlook what the total cost of the loan will be in the long run. Make sure you understand your out-of-pocket expenses, your financing options, and the total cost of your loan over time before moving forward. Transparency is important!
Timing Matters
Housing markets go through ups and downs, and there is no crystal ball. But timing does matter when you are buying a home. We can help you create an action plan to keep track of interest rates, to update you on what is happening in the market, and to crunch the numbers for you. Even if you are just in the beginning stages, it is important to meet with a Home Loan Specialist right from the start, so you make your mortgage work for you.