Ready to buy a home in 2014? Great! Still trying to decide? Here are just a few reasons you just may want to jump in to the real estate market and buy a home in 2014!
Shrinking Selection – After the economic downturn, there was a large inventory of homes for sale and a drop in both sales price and mortgage interest rates. Now a rebounding economy has resulted in increased consumer confidence and job growth, which in turn has made the average buyer’s selection process a bit tougher with more limited inventory. The best homes in the most desired locations sell quickly, and finding your dream home may become more difficult as inventory shrinks further. The Austin Board of Realtors reports that in January 2014, the Austin area saw a 27.9% decrease in months’ supply of homes compared to January 2013.
Interest Rates on the Rise – Though interest rates have risen slightly since the economic downturn, they are still considered very low by historical standards. The Mortgage Bankers Association, the National Association of Realtors, and Freddie Mac/Fannie Mae all predict 30-year fixed mortgage rates will rise to 5% in 2014, almost 1% higher than the rates today. That may not sound like much, but even for someone with good credit, the difference of one point on a 30-year fixed loan with a purchase price of $300,00 can amount to over $51,000 in additional interest payments over the life of the loan.
Buy vs. Rent – Rental occupancy rates made a significant jump in 2013, which drives us rent prices significantly. USA Today reported 5.2% increase in apartment rent in Austin during 2013, and another 3.7% jump is forecasted for 2014. Rising market value makes buying a better choice today over renting.
Build Equity – When you buy a home, you are building equity in that home, meaning you own more of your home as you pay off your mortgage. Your mortgage can be considered a “forced savings plan” which pays you back in the long run.
Price Increases on the Horizon / Appreciation – A highly active real estate market can create a seller’s market over time when inventory stays low. The Austin area is in high demand with a whopping 35.3% increase in population expected from 2010 – 2020. Prices are expected to appreciate by over 25% from now to 2018. As 2014 progresses and home values appreciate, it’s best for buyers to act quickly and secure a home that will appreciate with the market.
Financial Stability – When you own your own home and have a mortgage payment you can afford, you gain greater financial stability, and with that comes greater peace of mind. This is especially true with the volatility of the dollar’s value, stock market, and all-time high gold prices. Owning a home, as opposed to a stock, gives you a real asset that you can live in, rent out, or sell if you choose.
Tax Benefits – Homeowners can deduct the interest of their mortgage payments from their taxes, and interest is the largest part of your payments, especially in the early stages.
Family Wealth – Just like any other investment, buying low and selling high in real estate can provide family wealth. A recent Federal Reserve study from June of 2012 shows a homeowner’s average net worth is over 30 times greater than that of a renter’s. The average homeowner has a net worth of $174,500, while the average net worth of a renter is only $5,100.
Sought After Culture & Lifestyle – The greater Austin area has received notable praise for its unique lifestyle, warm climate, thriving culture, and booming economy, making a great place to live and own a home.
Whether you’re a first time home buyer, an investor, or this is your second or third home purchase, don’t go it alone! We have a team of agents who are expert negotiators that can help you get the most for your money in a real estate transaction. Contact us today to find out more!