Everyone needs a place to live.
Yes, some older "kids" may return home with their parents for a while, while others opt to work situations that involve housing, such as joining the military, working on a cruise ship, or opting for the Peace Corps. Around every American needs to rent or buy a house.
It has always been a big issue whether you should rent or buy.
If you choose to move within a few years, it's reasonable to rent. Purchasing a property comes with a variety of one-time costs that may not be reincurred if you move on quickly.
While house prices have gone steadily, there's no assurance that this will be true at the time you have to sell.
If you plan to spend at least a few years (maybe three or more) in the same place, buying is generally beneficial, especially when rental prices have increased.
If you're thinking about buying a house, history has suggested that the time is right now to purchase.
The following picture shows that there have been some decreases in median house prices, but that over time, the price of a house increases.
The St. Louis Fed., according to an image source
Why Does It Now Be The Best Time to Buy a House?
The median household price in the United States increased by $329,000. That's up from $289,200 five years earlier, and a massive increase from $222,900 in 2010.
The median price increased by more than $100,000 in ten years, but this year, the numbers have steadily increased.
If you wait for a house, history suggests you will pay more if you wait. That always raises the question, "But are we in a housing bubble?"
The reality is that bubbles are often a regional phenomenon.
Yes, there are countries like South Florida that have seen prices rising dramatically due to the epidemic. It's possible that some price correction will be made in such cities, but there's no guarantee.
Florida remains comparable to New York, and is there any reason to believe that future businesses will not open locations in Miami, Fort Lauderdale, and West Palm Beach?
Yes, there may be a drop in prices, but history suggests that on a national level, the price of a house always increases when you look at multi-year periods rather than quarters.
Is it time to purchase a house?
Mortgage rates, which have remained constant for years in the range from 2% to 4%, have in some cases surpassed 5%.
Some potential purchasers are on a stop, but it's important to consider what higher rates mean.
Here's how your payments might look if you get a $400,000 loan:
- 3%: $1,686 a month
- 4%: $1,910 a month
- 5%: $2,147 a month
That $224 per month for the increase from 3% to 4%, and another $237 per month when you go from 4% to 5%.
If you missed out on getting a $400,000 three-year loan, you'd be paying $461 more per month.
The major concern, however, is that there is no guarantee when (or if) mortgage rates will drop.
Higher rates may increase the amount of people's buying power and drive down the increase in housing prices, but low inventories in many hot markets suggest that this will not happen much.
If you want to live in an area for an extended period of time, then it's an ideal time to get a house if the price of ownership comes anywhere near the price of renting.
When you own a property, you build equity and history, demonstrating that if you give it long enough, prices eventually increase.
There are, of course, always exceptions, and a trustworthy Realtor should be able to assist you in dealing with them.
Old adages like "don't buy the nicest house on the street" have some meaning in them.
The numbers do not matter, and throughout the 57 years tracked by the Federal Reserve, "now" has generally always been the best time to purchase a house, since "yesterday" isn't an option.