Maybe you’ve outgrown your current home. Or perhaps you’re ready to take the leap from renting and purchase space of your own. Whether you’re a renter or current homeowner, buying a home is a large financial and emotional commitment that takes significant planning. You’ll want to consider the current economic climate and interest rates as you’re looking to buy. If you’re still on the fence, there are plenty of compelling reasons why 2016 might be your year to buy a home.
Reasons to buy in 2016
Historically low interest rates
Locking in a low rate in 2016 may be worth thousands of dollars of savings over the life of your home loan. It’s anticipated that the Federal Reserve may raise interest rates—Realtor.com’s chief analyst predicts rates to increase to 4.65 percent by the end of the year.
“If things play out as predicted, now is great time to lock in a low rate, considering rates are hovering near historic lows.” says Katie Miller, Vice President of Mortgage Products.
Home prices are stabilizing
Of course, this depends on where you’re buying. Home prices have steadily risen over the past few years as the market rebounded from the recession. The housing market is expected to level out in 2016 as the economy begins to normalize. The downside here is that the cost of homes is still increasing faster than wages are, meaning you’re probably not making much more but homes are still rising in value.
According to the National Association of Realtors, home prices are expected to increase only slightly in most U.S. cities, while still remaining well below their peak.
Given this environment, you’ll need to know what you can afford and your local market. Finding the right realtor will be crucial, because realtors know the local housing market and will help you find the home of your dreams, that’s still in your budget.
The cost to rent continues to climb
In places like Denver, Portland, Kansas City and Houston, rents have soared more than twice as fast as the national average. Part of the problem is that fewer people—including families still recovering from the economic downturn and millennials—are looking to buy. More renters eat up the inventory of available rentals and drive up rental costs. This, in combination with tax deductions for homeowners make owning your own home a more appealing and economical option than renting.
The bottom line
Only you can decide if now is the right time to buy. The economy, condition of the housing market and interest rates all play a role. However, your personal finances are the most important factoring in planning for homeownership. There are many reasons to be optimistic about this housing market if you’re considering buying this year. Your financial institution can help you determine how much home you can afford, and if now is the right time for you to buy.