Over the last few months as housing inventory has shrunk, home prices have risen, mortgage rates have risen from their historic lows, and increasing numbers of renters have been searching to buy a home.
The improving economy is expected to continue the cyclical moves in inventory, prices, and interest rates in the near term, so even millennials are starting to move more toward buying than renting a home.
According to Financial Samurai, “Now that the Fed is raising interest rates (forecast is twice for 2018 from current 1.5% level), you are hearing everybody from real estate brokers to market pundits in the media say, ‘Buy now before it’s too late!’ There’s nothing like a little Fear Of Missing Out to get people to make big decisions without thoroughly thinking things through.”
So, with increasing numbers of people seeking to buy a home instead of rent, there will be increasing pressure on inventory and prices, creating more competition among buyers and sellers alike.
Now is the Time to Buy a Home
If you are thinking about buying a home, there is no time like the present. Buying a home is more affordable than renting in many areas, including Dallas, Miami, San Antonio, Detroit, Philadelphia, Tampa-St. Petersburg, Cleveland, Pittsburgh, and St. Louis, according to Reuters. Therefore, increasing numbers of people are expected to stop renting and buy a home.
Furthermore, mortgage interest rates are expected to rise as the economy continues to prove. Rising rates, coupled with rising home prices, is causing many people to conclude that now a good time to buy a home, at least for the next year or so.
Per Reuters on March 1, 2018, “Last week the average 30-year mortgage rate was 4.4 percent, according to mortgage finance agency Freddie Mac, compared to 3.9 percent late in 2017. On a $380,000 home, that lifts monthly payments by about $100.”
A recent survey by Trulia shows that, “median rent increased 3.1% in 2017 with much higher increases experienced in key major metro areas. And over the past year, much attention has been given to the rising affordability issues in the rental market,” according to Housing Wire.
Why Will Mortgage Rates Rise?
Financial Samurai says that, “Mortgage rates and the 10-year yield have spiked higher in 2018 due to inflationary pressures from higher wage growth, strong economic indicators, and strong corporate earnings growth.”
Mortgage Rates: See Current Mortgage Interest Rates
The economy is growing, and the future looks promising, so there is no reason to suspect that interest rates will not continue to rise in the near term. Furthermore, there will be more competition, especially in more populous areas where there is less available land.
“Housing demand in 2018 will be fueled by more Millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher,” NAR Chief Economist Lawrence Yun said to Housing Wire. “However, with prices and mortgage rates also expected to increase, affordability pressures will persist.”
Get Pre-Approved for a Mortgage
If you are thinking about buying a home in the next few months, it is important to get pre-approved for a mortgage.
Pre-approvals are important because:
- They demonstrate to Realtors and sellers that you are a serious buyer.
- They show you are financially qualified, and there is a high probability you are able to close on the home.
- They let you know how much you can afford to pay for a home.
- They give you a competitive advantage over other home buyers who are not pre-qualified.
Marimark Mortgage serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.