The time to buy in many cities is now
April 14, 2017
Across the country, there may be some consumers who are worried about the impact of rising prices and mortgage rates on home affordability. As a consequence, many may now be shying away from getting into the housing market. But recent analysis and expert advice generally agrees on one point: Anyone who's looking to buy these days would be wise to get into the market as soon as possible.
"Many are wary of their chances to make a home purchase."
With the spring buying and selling season right around the corner, it seems that many Americans are a little wary of their chances of actually being able to make a home purchase in the near future, according to the latest data from the National Association of Realtors. Specifically, only about 56 percent of current renters think it's a good time to buy, down from 57 percent three months earlier and 62 percent on an annual basis.
This trend is driven heavily both by declining affordability and the fact that the housing inventory nationwide continues to remain at a relatively low level, the report said. On the other hand, consumers are generally more optimistic about their chances for financial success overall, so it may just be a matter of time before they feel better about the market.
What's the reality?
Through the end of last year, 15 of the 23 major cities in the Beracha, Hardin and Johnson Buy vs. Rent Index were holding steady in the "buy" range, and five more were on the edge between recommending consumers rent and buy, according to Florida Atlantic University and Florida International University, whose faculty collaborate on the index. That means only three major cities across the country - Dallas, Denver, and Houston - were more favorable for renters than buyers.
"This is great news for home ownership and the financial returns to ownership," said Ken Johnson, Ph.D., a real estate economist who is one of the index's authors and an associate dean of graduate programs and professor in FAU's College of Business. "We are not where we were in 2012, when nearly any purchase was a sound financial decision. However, overall, we are now in a situation where aggressive marketing from sellers combined with due diligence and sound negotiation from buyers is creating a housing market that's more in line with what we've seen historically."
"Previous buyers say the issues they encountered related to preparation."
For people who think they do have the ability to buy a home, it might also be wise to take a word of caution from those who have taken the same path before, according to the latest Zillow Group Report on Consumer Housing Trends. Previous buyers now say the most important issues they encountered when navigating the purchase process related to preparation, such as having backup plans when bids on homes they wanted fell through, getting pre-approved for a mortgage, and finding a real estate agent who could guide them along the way.
The earlier consumers can get into the market, the more likely they will be to lock in both low rates and home prices before they continue their upward climbs. Doing so could help buyers save tens of thousands of dollars over the lives of their loans.
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