4 reasons 2016 is the Year to Buy a Home
(From CNN, )
If you've been on the fence about buying a home, 2016 is the year to take the plunge.
Mortgage rates have been
bouncing around record lows
for a while now.
But even
though they're likely to start
going up, you haven't missed
your chance to get a deal on a
house.
A number of factors are coming together, making next year a good time to buy:
1. Home prices will finally calm down
Real estate values have been on the rise for a while, but are likely to slow their pace next year. Prices are expected to rise 3.5%, according to Zillow's Chief Economist Svenja Gudell.
Buyers who've been stuck behind the wave of rising prices may finally get the chance to jump in.
And that could lead to a flood of buyers, said Jonathan Smoke, chief economist at Realtor.com.
"We have the potential for about six million home sales just through
the months of April through September; that is basically impossible to
do," he said.
But not everyone will be in a position to take advantage.
Despite the slowdown, Zillow still expects home values to outpace wage
growth, which can make it tough to afford a home, especially for
lower-income buyers.
Plus, prices in the country's hottest
markets -- like San Francisco, Boston and New York City -- aren't
expected to pull back as much next year.
2. More homes will hit the market
The slowdown in home prices will prompt more owners to list their homes, Smoke said, giving buyers more choice.
"Because of the price appreciation they have experienced, you will have
more sellers put homes on the market next year," he said.
The new home market is also expected to grow in the coming year with
builders focusing more on starter and middle-range homes, which will
also boost inventory and make it easier for buyers.
With more homes on the market, bidding wars will become less common and prices could ease even more.
3. Dirt cheap mortgages could disappear
The Federal Reserve is widely expected to begin increasing interest
rates soon, which means the window for record low mortgage rates is
closing.
While rates are expected to go up gradually, higher rates push up borrowing costs and monthly mortgage payments.
"You are likely to get the best rate you will possibly see, perhaps in
your lifetimes through the majority of next year, but certainly, the
earlier the better," said Smoke.
4. Rents will still hurt
Rent prices are expected to continue to climb in the new year, which
means in most cities, buying will be cheaper than renting.
Even though mortgages could get more expensive, buying might still be the better deal.
Interest rates would need to rise to around 6.5% for the cost of buying
to equal that of renting on a national level, according to Ralph
McLaughlin, housing economist at Trulia.
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