New Year, New You, New Home, Is It The Right Time To Become A Homeowner?
By Neil Picart, PA, Realtor®
Many would be first-time homeowners have considered this question over the last few years and decided against it. After the financial/real estate crash many of us were scared to make the commitment to invest in real estate.
The value of any commodity is a result of some basic economic factors, supply and demand. Add to these the location of the commodity and you will determine a market value for that item. The house you live in is no different. It is a commodity that is traded on the open market. Ask any one you know who is looking or recently bought a home. They will all tell you the same thing, “We cannot find anything out there and when we do it’s a bidding war.” Inventories are at their lowest point in nearly 50 years 1 . There are a few factors that cause this, the pace of foreclosures have slowed, cash buyers have re-entered the market and builders were not building at the height of the crisis. Many former owner occupant homes have been converted to rentals by investors; those properties will not reenter the market anytime soon.
Chart courtesy of http://www.calculatedriskblog.com
The demand for properties in South Florida is back. We have cash buyers from our northern states, Canada, Latin America, The Caribbean, Europe, and Asia all looking to own property in South Florida. When you add that to our local demand you get an accurate picture of what the market will be for 2013.
Very low mortgage rates also increase the buying pressure on the market. The 30 year fixed mortgage rate at historic lows is fuelling demand in two important ways. First, purchasing a home now is more affordable than at any other time in our recent history. Second, the realization that at some point rates will start to rebound.
Another important factor to consider is the overall health of the economy. As more people find new employment and get their lives back together, they are again thinking of stepping out on their own, starting families, owning a home. This trend added to the rise in the asking price for existing homes in 2012. National Association of Realtors statistics shows total units sold by November 2012 up by 12.8% over total units sold in all of 2011 and the asking price for those units showed an increase of 10.1% over the same period.
So is 2013 the right time for you to purchase your first home? That decision is still a very personal one. If however you have been holding back on making the move until things look better overall in the economy then this should be your year to stake your claim for a home of your own.
- “Five Reasons Home Prices have been Rising,” The Wall Street Journal (Nov. 27, 2012)
Next issue: “Getting Ready for homeownership – A Self Prep Guide”