Why Now is the Time to Buy
The Federal Reserve Bank has just announced an interest rate hike for only the second time in a decade. While an interest rate hike is positive in the sense that it points to a strengthening economy, it can be detrimental to home buyers ready to dive into homeownership. And, with the upward trajectory of the economy expected to continue, experts are predicting another two to three rate hikes during 2017. What does this mean for potential buyers that haven’t purchased yet? A report from Black Knight Financial Services warns that affordability will be dramatically impacted by an increase in mortgage rates. The report states, “A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on the home buyer.” Despite this recent minimal increase, interest rates are still at historically low levels, making home buying more affordable than ever. Individuals looking for a 30-year fixed-rate home loan can generally receive interest rates around 4 percent. Interest rates do vary depending on credit score, loan amount and term, home price and loan type. Another factor in the decision to purchase a home is the likelihood that home prices will continue to rise. Home prices have appreciated 6.3 percent over the last 12 months according to CoreLogic’s latest Home Price Index, and that same report expects prices to rise an additional 5.2 percent over the next year. There is an on-going low supply and high demand of rental units which makes rental rates continue to rise. With a prediction of increasing rental rates, more people are looking to invest in a home. As a homeowner, not only will monthly payments likely be lower than rent, but deductions can be made on all the monthly interest being paid on the loan. Homeowners may also write off certain home-related expenses and home property taxes. To summarize all of this information, unlike years past, all key economic indicators suggest that this is one of the best times in American history to buy a home. Interest rates, while starting to rise, are still at historically low levels and rental rates continue to be at an all-time high. Buying a home in today’s era is not only a financially smart decision, but purchasing a home also allows for putting down roots and becoming part of a community. At Dragas, we want to see all individuals who are interested in becoming homeowners achieve their goal. That’s why we offer affordable new homes in two of the country’s best cities – Virginia Beach and Chesapeake. To see fifteen additional reasons why you should buy a new home, visit www.dragas.com. If you’re ready to make the move to a new home, contact us today! *Consult a tax professional to verify your actual tax savings.