The current state of affairs in the real estate market is still highly advantageous to sellers, yet there are still some benefits to being a buyer. Those who are searching for a home may be up against difficulties such as a lack of available listings and fluctuating mortgage rates, making the task more challenging than usual. Yet potential buyers should not be discouraged, as remaining persistent can open up opportunities that may not have been possible otherwise. Here are few of them.
The financial benefits of homeownership extend far beyond the short-term.
Homeownership increases your net worth over time and begins to build long-term financial stability. Every month, rather than the money spent on rent going towards someone else's equity, it goes towards your own. Owning a home can be an important stepping stone in developing a foundation of financial security. It also creates a sense of pride and accomplishment that cannot be overstated. It is essential to start as early as possible in order to reap the full rewards of such an investment. Freddie Mac puts it this way: "Homeownership not only enhances your quality of life, but can also be an integral element in creating long-term wealth." Taking ownership of one's housing expenses is often the first step towards achieving lifetime financial goals.
Homeownership has the potential to bring a range of financial rewards in the long-term, such as increased home equity and value appreciation over time. However, it is important to bear in mind that today's seller's market can present some short-term challenges. These could include difficulty finding a suitable buyer willing to pay an appropriate price for your property or having to compete with other sellers in a crowded market. Despite these issues, homeownership can still be a worthwhile investment if you are able to look beyond the immediate problems and make the most of its long-term advantages.
Mortgage rates are constantly changing
Mortgage rates have seen a steadily decreasing trend over the past few months, dropping to an average of 6.5% according to Sam Khater, Chief Economist at Freddie Mac. This decline in rates has been attributed to the economic uncertainty that currently exists, creating an influx of borrowers seeking mortgage options. This indicates that lower rates are having a positive effect on the market, as more people are taking advantage of these reduced prices. Furthermore, this drop in rates has also led to an increase in refinances which further drives mortgage activity. As such, this trend appears likely to continue for the foreseeable future.
The recent decrease in mortgage rates is a strong indication of an improved market for potential homeowners. Hannah Jones, Economic Data Analyst for realtor.com, states that this change should help make buying a home more attainable: “With the onset of spring we have seen mortgage rates dip down, and this signals progress towards making home ownership affordable for all buyers.” Those who considered themselves unable to purchase when rates were at their highest can now breathe a sigh of relief thanks to the current drop in costs; they now have the purchasing power needed to make their dream of homeownership a reality.
Home Prices Will Increase
As per the Home Price Expectation Survey, which surveyed more than 100 real estate experts, it has been forecasted that home prices will begin to rise steadily in the upcoming years following a minor decrease this year (illustrated in the graph below). This survey revealed that even though there could be a slight dip in 2020, the overall trend of rising home values is likely to continue throughout 2021 and beyond. Property analysts expect the national median home value to increase around 4.1% annually over the next five years, with major metropolitan areas seeing an even larger surge in pricing. As such, homeowners can capitalize on this trend and hold on to their homes for potential gains in equity.
Although buying a home right now can seem daunting and the current market conditions may cause confusion, there are long-term rewards far outweighing the short-term challenges of homeownership. With historically low mortgage rates and predictions that home prices will only continue to rise in the near future, now is an opportune time to become a homeowner. From increased financial stability to building equity over time, homeowners can also look forward to numerous other benefits that come from taking on this extraordinary investment. So if you’re thinking about making a move and would like more information about how best to plan for your new journey towards homeownership, let’s connect so we can analyze your options! There's no time like the present for you to start unlocking those potential rewards for yourself.