Three Good Reasons to Buy a Home Now

Here are three great reasons to consider buying a home today instead of waiting.

1.) Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released last week projects appreciation in home values over the next five years to be between 12.3% (most pessimistic) and 32.8% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes any sense.

2.) Mortgage Interest Rates Are Increasing

As reported by Freddie Mac, interest rates for 30-year fixed-rate mortgages have risen about one full percentage point over recent historic lows.

The National Association of Realtors, the Mortgage Bankers Association, Freddie Mac and Fannie Mae, in their July forecasts, have all projected 30-year-fixed mortgage interest rates to be between 4.8 and 5.1% by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3.) It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

When does the home buying process begin?

The buying process begins long before buyers actually contact an agent. On average, buyers started considering a purchase nearly six months (23.7 weeks) before contacting a real estate agent, up notably from 12.2 weeks last year. They are also taking their time investigating homes and neighborhoods before contacting an agent, spending a little over seven months on this compared to about 1.5 months last year. The median number of weeks that buyers spent looking for a home with their agent also increased from 9 weeks last year to 9.8 weeks this year. The lengthier consideration time and home search reflect the limited availability of homes for sale and the increasing prices, which are causing buyers to weigh their options more carefully.

When they were finally ready to make a purchase, buyers tended not to move very far away from their previous homes—the median distance from their last residence was 27 miles. More than 8 out of every 10 buyers (85 percent) made offers on other homes and one-third claim they settled for the best option given the limited supply of houses. Price decreases, desire for a better location and favorable financing were the top three reasons that buyers purchased. Nearly half did not buy sooner because there were not many good housing options, others waited to see when prices would stabilize or had difficulty qualifying for a mortgage. The average buyer plans to stay in their home for six years.

Your House As Seen By:

Yourself...



Your Buyer...


Your Lender... 


 
Your Appraiser...


Your Tax Assessor...

One of the key obstacles to a housing recovery over the past five years has been the overhang of distressed properties about to come to market which has come to be known as shadow inventory.  Shadow inventory numbers are comprised of three separate categories of properties:

1. properties where the home owner is 90+ days behind on their mortgage payments
2. properties that are already in the foreclosure process
3. properties already foreclosed on and owned by the banks but not yet on the market

The great news is that shadow inventory is down 18.2% from the same time last year. According to the latest National Foreclosure Report released by CoreLogic:

• Completed foreclosures are down 27% from a year ago
• National foreclosure inventory is down 29% from a year ago
• Seriously delinquent loans (90+ days behind) are down 22.7% from a year ago

The decline in seriously delinquent loans is phenomenal news. Dr. Mark Fleming, chief economist for CoreLogic explains why:

“The stock of seriously delinquent homes, which is the main driver of shadow inventory, is the lowest level since December 2008. Over the last year, it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013.”

How Does Compare to Historic Norms?

In their latest Mortgage Monitor, LPS Senior VP Herb Blecher sheds some light on where we stand compared to historic norms:

“Though they are still approximately 1.4 times what they were, on average, during the 1995 to 2005 period, delinquencies have come down significantly from their January 2010 peak. In large part, this is due to the continuing decline in new problem loans — as fewer problem loans are coming into the system, the existing inventories are working their way through the pipeline. New problem loan rates are now at just 0.73 percent, which is right about on par with the annual averages during 2005 and 2006, and extremely close to the 0.55 percent average for the 2000-2004 period preceding.”

RealtyTrac also recently reported:

“A total of 127,790 U.S. properties had foreclosure filings in June, down 14 percent from the previous month and down 35 percent from a year ago to the lowest monthly level since December 2006 — a six and a half year low.”

Going Forward?

A survey of industry experts produced by The Professional Risk Managers’ International Association (PRMIA) shows that the fall in delinquency rates is projected to continue in the future:

“For the first time in survey history, the number of respondents predicting that mortgage delinquencies would decrease (46.9%) exceeds those who believe the level will stay the same (40.7%).”

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