Realtor Charleston SC: Don’t Let Opportunity Pass You
There’s an old saying: “Whether you buy or rent, either way your paying someone’s mortgage”.
Is now a good time to buy in the current real estate market? The simple answer is yes. There are many reasons why, but let’s take a look at the reasons why not buying now is a bad decision.
Certainly you must have the desire and means to buy a home–and I will show you that it is easier than you probably realize–but read on and you will see that buying a home is a much better decision than continuing to rent.
Why is it a good time to buy?
Realtor Charleston SC: The Market Is Strong
Buyers want to know that the real estate market is doing well and will continue to do so over the next few years. They want the confidence to know that this large investment will pay off.
First, take a look at home values. Here is a look at home values broken down by month–this chart compares home values year-over-year, so February of 2017 is compared to February of 2016, January 2016 compared to January 2015, and so on:
Here is the latest home value projections from the most recent Home Price Expectation Survey:
It is interesting to note that the last two Home Price Expectation Surveys had home values in 2017 appreciating in the 4% range–yet so far this year, home values are far exceeding the projections.
The Home Price Expectation Survey is a quarterly survey of over 100 top industry analysts, economists, and market experts to project home values for the coming years. The numbers shown in the graph is the mean of the projections–exactly half of the projections are higher, half are lower.
Here is a breakdown of the latest projections showing the bears–the most conservative projections–still showing home values to continue to increase:
These are projections by the experts. But what is driving home values to increase?
It is simple supply and demand. There is very strong buyer demand and a lack of inventory available to meet the demand. Here is a look at inventory of homes for sale over the last 12 months:
In a normal real estate market, there is 6 months inventory available. We are nowhere near that level, and that is driving prices upward.
Because prices are increasing, the longer you wait to buy the more a home will cost you. It is even possible that in a few months to a year, you won’t be able to afford the home you like today.
Another factor is working against you besides increasing home values–increasing interest rates. Higher rates mean your monthly mortgage payment will be higher. Combine this with higher prices and affordability becomes an issue–you will spend more for less house.
Realtor Charleston SC: Build Equity, Build Wealth
But there is a way to make appreciation work for you–by gaining equity once you own a home. Equity is a key way the majority of Americans build wealth.
Here is a look at that in action. Based on the latest projections from the Home Price Expectation Survey, if you purchased a $250,000 home in January, here is the amount of wealth you would build up over the next 5 years:
Home ownership makes it much easier to build up your net worth. In fact, a home owner’s net worth is now 45 times greater than the average net worth of a renter:
If you rent, you are simply throwing money away. With a mortgage, you are investing your money into your future.
Rent costs you in more ways than one.
With a mortgage, your monthly housing payment stays the same for 30 years. Rents inevitably increase over the years, as history shows us:
Rent also eats up more of your monthly paycheck:
With the strong demand for houses and the lack of inventory, the current housing market is a little crazy for buyers.
However, the rental market is just as competitive, if not more.
Realtor Charleston SC: Don’t Disqualify Yourself, Know The Facts
I posted extensively about misconceptions in the market, so I will just briefly touch on them here. Many would be buyers have already disqualified themselves because they feel that they need near perfect credit to qualify for a mortgage. But that is simply not true. You do not need a credit score of 750 or greater to qualify for a mortgage.
Here is a look at the average credit score for approved mortgage last month:
And here is a look at the average FICO score broken down by mortgage type:
FHA loans are popular loans for first time home buyers. Notice that the average FHA loan closed last month with a FICO score below 700.
Another misconception is the amount of money required for a down payment. Too many people mistakenly believe that you need 10% or 20% for a down payment. However, that is not true.
If you qualify for a VA or USDA loan, you can purchase a home with no money down. FHA loans only require 3% down. There are first time buyer loans in which you only need 1% down–the lender will gift you 2% down payment.
Realtor Charleston SC: Take A Millionaire’s Advice
Buying a home simply makes so much more sense than renting. If a millionaire were to give you financial advice, you’d probably listen, right? Well, here is what one millionaire has to say.
And it’s not just one millionaires opinion:
If you are thinking about buying a home, congratulations on the great decision. But perhaps the home buying process is a little intimidating to you. No need to worry, I have the resources to help you learn everything you need to know.
It is important that you choose the right realtor Charleston SC to help you throughout the process. Keep in mind that it costs you nothing to work with a realtor when purchasing a home in the Charleston SC area.