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4 Reasons To Buy A Home In 2017

Downers Grove IL Real Estate Agent | 4 Reasons To Buy A Home In 2017

Numerous websites are doing their year-in-review stories. We thought we would look back in order to look ahead. Rates may be rising slightly, but they’re still very low. Here’s the bottom line: There are still plenty of great reasons to buy a home in 2017.

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We came up with our top four reasons why buying a home in the next year could make for a great investment.

It actually makes a lot of sense for many people to go ahead and make the leap to homeownership.

Rates are risingIn 1981, when mortgage rates hit 18% and seemed to rise every day, single-digit rates seemed like an impossible dream.
Last August, however, rates on 30-year mortgages bottomed out at 3.55%. Now that the Federal Reserve finally decided to raise its key interest rate, mortgage rates have been climbing slowly. Today, the average rate is just above 4%; by 2019 or 2020, rates could easily climb to 6%.

“All signs point to this trend continuing,” says Richard DeNapoli, managing director for Coral Gables Trust and a former Florida real estate commissioner.

Before you freak out, take heart: Rising rates aren’t necessarily a deal breaker for buyers. The National Association of Realtors® calculated that a rise from 4.2% to 5% would increase average monthly mortgage payments by $90—not nothing, but not a catastrophe, either. And if you take the long view, those higher rates are still historically low.

“For buyers there still is opportunity,” says Danielle Hale, managing director of housing research for the NAR. “For those who are still able to get into the market, these low rates continue to be helpful.”

Another upside: When rates go up, competition and prices often go down.

“I’d tell buyers not to panic, because higher mortgage rates eventually cause sellers to be more flexible on pricing,” DeNapoli says.

Rent Is ExpensiveBuying a house is a huge financial transaction and one that definitely shouldn’t be taken lightly. As with any big decision, you should take a moment to determine whether buying is right for you.
However, if you have some basics like a steady source of income and some savings, it can make much more sense than renting.

A study released this past October from Trulia shows that buying a home nationwide is 37.7% less expensive than renting. According to the study, the gap is 0.5% higher than where it was last year. It’s also important to remember that rent has a tendency to always increase with inflation. Your mortgage payment is much less likely to see drastic changes, particularly if you’re in a fixed rate.

Of course there are areas of the country in which this gap is greater than others. After all, real estate is all about location, location, location. However, in many areas of the country, you could end up keeping more of your money in your pocket if you can afford to buy.

Inventory is shrinkingIn November 2016, there were only 1.85 million homes for sale. That’s a nearly 10% drop from the year before. And it continues a trend of steady decline since just before the housing crash, when inventory peaked.
Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year.

Or even next month. If you get moving now (during the winter, which is largely considered to be real estate’s off-season), you’ll have less competition for those homes than you will in the peak spring and summer months.

Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.

“If you think it’s bad right now, wait until April to August,” Smoke says.

Mortgage Rates Are Still GreatThere’s no denying that mortgage rates are up since the election. However, it’s important to put these things in a little bit of context.
First, let’s take a look at where we’re at. Rates vary depending on a number of factors, but rates are in the mid-4% range right now. That’s not as low as it was a couple of months ago, but it’s certainly not very high, either.

Freddie Mac has been tracking average monthly mortgage rates for 45 years, dating back to 1971. While the average mortgage rate of 16.63% in 1981 with 2.1 points in prepaid interest (bringing 2.1% of the loan amount to the table) probably represents inflation gone haywire more than anything else.

Still, in 2006, the average mortgage rate was 6.41% and in the late ‘80s, mortgage rates were between 9% – 10%. In that light, today’s rates still look pretty awesome.

Looking to buy a home in Downers Grove this year? You need a rock-solid Realtor. Paul Froiland is your Downers Grove IL real estate agent. Contact Downers Grove real estate agents De Stijl Realty today!