Should You Buy a Home Now? Answer These Three Questions
BY NANCY BIERENGA, REALTOR®, E-PRO, ABR, éLAN REALTY, PAST PRESIDENT, WEST MICHIGAN LAKESHORE ASSOCIATION OF REALTORS
If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.
Ask yourself the following three questions to help you decide if now is a good time for you to buy in today’s market.
1. Why am I buying a home in the first place? This 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 money.
There was a recent study by the Joint Center for Housing Studies at Harvard University. It showed that the top four reasons Americans buy a home have nothing to do with money. The actual reasons are:
• A good place to raise children and provide them with 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 benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase now, wait a period of time, or not to buy at all.
2. Where are home values headed? According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in February (the latest data available) was $249,500. This is up 3.6% from last year. The increase also marks the 84th consecutive month with year-over-year gains.
Looking at home prices year over year, CoreLogic is forecasting an increase of 4.6%. In other words, a home that costs you $250,000 today will cost you an additional $11,500 if you wait until next year to buy it.
What does that mean to you? Simply put, with prices increasing, it may cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.
3. Where are mortgage interest rates headed? A buyer must be concerned about more than just prices. The "long-term cost" of a home can be dramatically impacted by even a small increase in mortgage rates. Freddie Mac, Fannie Mae, the Mortgage Bankers Association and NAR have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below.
The bottom line. Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision. Once you decide that now is the time, the next first step is finding a lender and getting approved for a mortgage. Next month we’ll look at ways to make that decision. If you can’t wait until next month, you are welcome to call me for a preview of next steps.
Nancy Bierenga, of élan Realty, is past president of the West Michigan Lakeshore Association of REALTORS®, a member of the National, Michigan, and West Michigan Lakeshore Associations of REALTORS®, and the Greater Muskegon Woman's Club. She is an Accredited Buyer's Representative, a Certified e-Pro REALTOR®, and a Certified Fair Housing REALTOR®. She and husband Robert have lived in Muskegon since 1996. Phone Nancy at (231) 730-0887, email Nancy@HousesByNancy.com, stop by élan Realty's office at 4075 Airline Rd., Muskegon or visit the élan Realty on Facebook here.
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