In case you haven’t heard, experts are forecasting the perfect storm for home buyers in 2016. That perfect storm is the result of four factors coming together for a limited time to create the lowest prices and interest rates as well as the highest inventory we’ve seen in years.
Factor #1: Lower prices
While we’ve watched home prices steadily climb in recent years, that trend will stabilize a bit in 2016. Experts predict that house prices will continue to rise at a rate of about 3.5% in the coming year, which is about half as much as they have in the past three years. By not taking advantage of this price moderation, you run the risk of losing out when prices return to their steeper rate of incline.
Factor #2: More inventory
Trends are indicating that there will be an increase in the volume of houses being put on the market in the coming months. This is good news for buyers, as it suggests there will be plenty of inventory to choose from, and at more reasonable prices. In addition, it is expected that there will be a spike in lower-priced homes being built, so those on a limited budget will have more new homes to choose from than they have in recent years.
Factor #3: High cost of rent
Those who have been renting have likely been paying very high rents over the last few years. In fact, studies show that the rapid increase in housing rents has made it more economical to purchase a home.
Analysts see no end to this trend in the coming year. In contrast, locking in a low interest home loan guarantees that your mortgage payment will not increase. In addition to budget predictability, homeownership offers tax benefits that you do not qualify for if you are renting.
Factor #4: Interest rates still low, but not for long
If you’ve been keeping an eye on interest rates, you’re aware that they continue to hover at around 4% for a 30-year fixed mortgage – which is very low. However, financial experts anticipate that rates will start to increase at a faster pace as we get further into 2016. Those who continue to put off purchasing a home may be disappointed with the high probability of facing higher interest rates and prices in 2017 and beyond.
What are you waiting for? Contact Cliffco Mortgage Bankers now at (516) 408-7300. Our home loan specialists will guide you every step of the way, ensuring you get the most out of your investment.