Delaying Your Home Search?

Are you planning to wait until spring to begin your search for a home?     Although spring is the classic time of year to buy, you may want to consider the following before deciding to postpone your purchase. Right now, the most compelling reason to jump into the housing market is the mortgage interest rate, now at all time lows. Smart buyers think in terms of monthly payments and the long term cost of a loan in addition to the purchase price. Currently, interest rates are the lowest they’ve been in over 50 years, at fixed rates of 4.17%.   According to the National Association of Realtors’ Chief Economist, Lawrence Yun, “ Economists are predicting a rise to 5% or 5.5% in the course of the next year.”   That translates to almost $2,000 a year or $57,975 over the life of $200,000, 30-year fixed rate loan.   The risk of rates increasing seems to overshadow the risk of prices falling further. In addition to interest rates being a major factor,   there are a few other determinants to consider.   Inventory is plentiful.   Nationally, there is a 10–12 month supply of homes on the market, which is considered high.   A six month supply is thought to be a balanced market and is historically the average. We are tracking the national figures. Prices are the final factor.   “Median prices are lower than they were,” says Lawrence Yun, “and economists expect increases in values during the next twelve months.”     In the Rhode Island market, the median price hit a low in quarter two of 2009 and re-hit that value in Q1 of 2010, but has risen slightly over the last two quarters. While predicting the future is impossible, it does seem like we are at a bottom as the experts are saying. Considering all factors — the large selection of homes available, a price to value ratio, and especially the cost of your monthly payment, you may find this is the perfect time to start buying your home.