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Waiting Until 2016 to Buy a Home? Some Facts to Consider
Despite the labeling of it being a seller’s climate in the current real estate market, there’s an upward trend with first-time home buyers looking to purchase their first single family home or condominium, more so than in previous years. Much of the current housing market for first-time buyers is comprised of the millennial generation, who are now in their mid-twenties to early thirties. This leads us to our primary topic for this blog, which is, should you wait until 2016 to purchase a home.
At The Daniels Group, we are always looking to offer clients the best advice in this arena. While there are many factors that play into purchasing a home, if you’re on the fence of whether to buy now or wait, we’ve broken down the research and laid out some industry predictions for you to consider in this debate:
Consider the Long Term Cost of Waiting To Buy
If you’re weighing out your options on whether to wait or act now, one thing to think about is the actual cost of waiting to buy. This is defined as the additional cost it would take to buy a home if prices and interest increase over a given period of time. Freddie Mac has introduced some noteworthy research on the forecasted trends of interest rates for 2016, and predicts that we will soon see a steady increase in these rates. So while home prices may fluctuate, the increased interest rates could mean that you’ll end up paying more in the end.
Research tells us we’re at the beginning stages of this shift, but if you’re waiting to purchase a home it’s important to keep in mind how the potential interest rate could affect the price you’ll be paying over an extended period of time.
Home Prices Are Predicted to Increase in Addition to Interest Rates
According to Freddie Mac and Corelogic, interest rates will likely increase to 5% over the next 12 months, and home prices are expected to appreciate by around 5.1%. If we calculate the cost of your house payment with these projected figures, you could end up paying more each month than if you were to purchase a home in the current market. At 5%, that extra money may seem like a small amount when you look at it monthly, but it adds up over time. Theoretically, you could pay over $70,000 more for your house over the course of your 30 year loan, if you decide to wait. That’s a substantial amount of money that could be better spent within your lifetime.
While nothing can be guaranteed when predicting and forecasting the housing market, it’s always good to know your options. The best thing you can do is hire a qualified, reputable real estate professional to help guide you through the process.
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