A recent Zillow report found that the average home costs around $1 million in 197 different cities. In 2018 alone, 23 cities have been added to the millionaire's club. This reflects an ongoing trend in the U.S: homes are simply getting more expensive.
Unsurprisingly, most of these million dollar homes reside in wealthy suburbs of popular cities. However, there are a few outliers that indicate home value growth is becoming a universal trend. Joining the list this year are cities like Sullivan's Island, South Carolina, Biltmore Forest, North Carolina, and Anna Maria, Florida.
The numbers keep climbing. Estimates show that the number of cities in which half of homes are valued over $1 million will reach an all-time high over the next year. If you're expecting to buy a home, here are a few options to consider to help support you in your journey.
Higher Home Values Means Larger Loans
Naturally, as home prices increase so will mortgage principals. For this reason, it is more important than ever to secure a mortgage with the lowest possible interest rate.
A mortgage rate tool allows you to compare different loan providers based on their rates and ensure your new home stays within an expected budget. As a good rule of thumb, your monthly mortgage payment (including principal, taxes, interest, insurance) shouldn't exceed 30 percent of your monthly income. To find the right option for you, shop around a bit. There are countless mortgage programs available and taking the appropriate time, with the right support, can help you find a perfect fit.
If you're living in a city experiencing extreme home value growth, buying a home may be out of reach. If that's the case, consider renting as an alternative to home buying. Renting can be a wise financial decision if you're not in a position to secure an affordable mortgage quite yet.
However, as home values increase, rent prices will likely increase proportionately. This makes it more important than ever to have a solid credit score. Your credit standing will be considered during the rental application process, and this score will be used to assess your reliability as a tenant.
Improving Your Credit Score
Whether you're considering taking out a mortgage or planning to rent for awhile longer, your credit score is a key contributor to long term success. Your credit standing affects mortgage rates and will determine the types of properties you will be able to rent.
If you're not confident that your current credit score can support the type of home you'd like, look into credit repair solutions. Increasing your credit score can be as simple as disputing incorrect items on your credit report and can make the difference between affording your dream house or settling for second-best.
The trend of increased home value may slow over time, but it won't be going away anytime soon. In the meantime, be prepared to do some credit-upkeep if you're located in or near any booming U.S. city.