The good news: the economy seems to be well on the road to recovery. The bad news (for new home buyers anyway): the economy seems to be well on the road to recovery. Obviously a healthy economy in the United States is a good thing for everyone, but it certainly can make the home buying experience a bit more expensive. Here are three reasons to act now if you are thinking of purchasing a home:
1. Mortgage rates could soon be on the rise.
As stability returns to America so will the higher interest rates. In the months to come there will be numerous news articles discussing how the Federal Reserve will be raising the rate of interest it charges to lend money to banks. While this does not have a direct effect on mortgage rates, it definitely has an indirect effect. Eventually, banks and lenders will have to start raising their lending rates, including those for home loans, to make up for the higher cost they are paying to borrow money from the Fed.
2. The number of homes available is shrinking.
A robust economy means that Americans are thriving at work. Higher incomes are leading to vastly improved credit. More money plus good credit scores equals a huge number of people looking to buy homes. We all know that it makes a lot more sense to own a home than it does to throw away rent money every month. Sometimes, however, circumstances do not allow us to do the most sensible thing. But now circumstances are changing and people are house hunting in droves. The subsequent inevitable drop in inventory is what brings us to our third reason to buy a home in 2017:
3. Home prices are going up.
Since we just discussed how the supply of homes is shrinking due to increased demand, the law of supply and demand tells us that this will result in prices going up. There is a reason it is called the “law” of supply and demand and not the “theory” of supply and demand, because this price increase will definitely occur. In fact, there is data showing that prices are already on the rise in most major markets. In some places, home prices are now higher than they were before the 2007 crash!
To the best of my knowledge, nobody can predict the future, but numbers do not lie. Data from multiple sources shows rising mortgage rates, shrinking housing inventory, and increased home prices. Taking all of this into account, buying now seems to make a lot of sense, especially if you were already thinking of getting that new home.