The housing market is recovering. We’ve all heard this conventional wisdom repeated again and again. But what does this actually mean for potential homebuyers? Is now really a good time to buy?
First, the current situation: Home prices have been rising. They’re up 10.2% nationally from last year, according to the leading measure of U.S. home prices, the S&P/Case-Shiller Home Price Indices. But remember, they are still down substantially from pre-financial crisis peaks.
Meanwhile, mortgage rates are at historic lows when you compare them to the 8% you could score for a 30-year fixed mortgage in the 1990s or 17% in the early 1980s. But rates have been rising recently, with the 30-year fixed rate averaging 4.12%, according to Bankrate.com’s national survey of large lenders. That’s up from 3.52% a little more than six weeks ago.
[Click here to check home loan rates in your area.]
Given these factors, is now really a good time to buy a home?
Absolutely, says Ilyce R. Glink, award-winning real estate columnist and author. She explains why in the accompanying Destination Home video.
For one, despite the large home price gains we are hearing about, there are communities where prices are still down 30% to 50% from their peaks, meaning you can still score a deal.
That said, you shouldn't buy just because you can afford it, especially if you want your purchase to work out from an investment standpoint when you go to sell. According to Glink, the key question you have to ask yourself is: Where do you want to be in the next five or seven years?
That’s because it can take at least that long for the costs associated with selling a house to even out with realistic home price gains. In the accompanying video, Glink explains how the math needs to work out for you to make money — or at least not lose it — when you ultimately sell the house. That’s something you have to consider when you decide to buy. And as we all learned from the most recent housing crisis, home prices do not always go up.
And finally, if you’re concerned about the recent rise in mortgage rates, Glink has a message for you. “If a half a percent is the difference in affordability for you, you’re buying the wrong house,” she says. “Buy a cheaper house!”
Additional Footage Provided by: RealTourCast.com