Houses For Sale Charleston SC: Factors Working Against Buyers
If you are thinking about buying houses for sale Charleston SC, then there are many reasons it is better to buy sooner than later.
There are some good things that have happened to make buying more affordable, but there are also many factors working against buyers who wait.
For anyone worried about the state of the market, all signs point to a healthy market that continues to grow.
Home sales numbers have steadily increased, as have home values.
Home appreciation rates have slowed over the last 6 months, but home values are still climbing.
This is good because buyers can look forward to continued appreciation once they own a home.
The rate of appreciation is more in line with historical norms, and is a rate that is healthy and maintainable.
It also means that home prices aren’t climbing as rapidly as they have, helping to keep homes affordable.
Recently the FHA announced that the minimum down payment was reduced from 3.5% to 3%.
Also, the rates for the required Mortgage Insurance on FHA loans have also been reduced which reduces monthly payments and the amount of interest paid over the life of the loan.
There are several factors working against buyers, and these factors will continue to make it even tougher to buy. In fact, some of these could end up pricing a good portion of the potential buyers out of the market.
Over the course of the last year, home prices have risen at nearly double the rate of wages. If this continues, then many buyers won’t be able to buy a home. However, for renters, things continue to get worse for them as well. Not only have home prices increased, but so have rents.
Rental vacancies hit a 21 year low at the end of 2014. Part of that is attributable to the highest number of new household formations in years.
These new households aren’t strictly new home purchases.
These include people that moved out of a roommate situation into their own place and also people that moved out of Mom and Dad’s house.
Home ownership allows for you to build wealth much easier and at a greater amount than renters.
A mortgage payment is locked in for 30 years. Your monthly housing payment will not increase. That can’t be said about rents–they are constantly on the rise.
Plus, right now interest rates are still near their historical lows, so you can more than likely get a mortgage for less than rent. Speaking of interest rates, that is another factor that could limit buying power in the coming months.
Rates remain very low right now–in fact, they are well below where many experts expected them to be in 2015.
However, almost all market analysts see interest rates increasing throughout 2015, and many think we will see them rise a full point.
With interest rates increasing and home prices increasing, this will drop the amount of house you can buy.
A $200,000 house right now at 3.75% is a monthly payment of $926.23 (principle and interest).
Later this year that same house could be selling for $210,000 (if it appreciates at 5%, which is a little above where we are right now) at 4.5% is a monthly payment $1,064.04.
While a little over $100 a month may not sound like much, you also have to factor in a higher down payment as well.
The down payment has been a misconception amongst buyers and is another factor that has worked against them.
However, as I mentioned above, an FHA loan (one of the most popular loans for first time buyers) only requires 3%.
Plus, you can get the down payment gifted to you by family.
Credit concerns are another problem. Many would be buyers simply don’t think they are qualified.
A mortgage pre approval is free, and it only takes a little of your time. This will let you know where you stand.
You may have a couple credit issues that you can clear up and qualify for a better mortgage. Basically, you can get a lower monthly payment.
If there are major issues on your credit that will keep you from qualifying for a mortgage altogether, then the mortgage loan officer can show you the steps you need to take to remedy those issues and get them eliminated in the quickest amount of time.
So, you realize that prices are going up, interest rates are going up, you have good credit and a down payment saved up and you’ve decided that NOW is the time to buy rather than waiting.
Rents are only going up, and you don’t want to move back in with the folks. That’s great, but there is still something working against you.
We simply do not have enough homes to meet the demand.
This has contributed to prices continuing to rise–simple supply and demand, Economics 101.
If you are searching for houses for sale Charleston SC and you find one you really like, then your best bet is to put an offer on it right away.
I realize that buying a home, especially a first home, can be a little nerve racking. You certainly don’t want to feel pressured into a house, only to have buyer’s remorse.
However, if you see a house you really like, you might want to take a day to think about it and then put in an offer the following day.
However, what if another buyer liked the house, thought the exact same thing as you, but saw the house one day earlier?
The best homes go quickly. So buyers need to act quickly. This isn’t a scare tactic or high pressure sales, it simply the nature of things. By knowing this in advance, you can be fully prepared as you go house hunting.
It is also possible for homes to receive multiple offers, sometimes leading to a bidding war. This is not uncommon right now. It can be frustrating, especially after you go through a couple houses without getting them.
Again, this is just to let you know how it is out there to prepare you for it and to try and take away some potential stress–the situations aren’t enjoyable, but at least if you know they might come up, then it is a less shocking.
If you are thinking about buying, then it is smarter to buy sooner rather than later. Waiting will literally cost you and might not even be an option later.
If you are searching for houses for sale Charleston SC, then bee sure to visit my Pam Marshall Realtor website.