1. Interest Rates
Although the economy is improving and interest rates can’t stay low forever, a quote from Janet Yellen, chairwoman of the Federal Reserve, should give some optimism to those looking to purchase soon:
“In particular, the committee considers it unlikely to begin the normalization process for at least the next couple of meetings,” said Yellen.
There’s a lot of fancy jargon in here, but it basically means that the Fed wants to take its time and let things play out before raising interest rates. Increases in interest rates probably won’t come before mid-2015 at the earliest. This gives you plenty of time to take advantage of the low rates available now before they go back up.
Economic conditions affect how much money there is to spend. Therefore, the current economic growth, combined with a drop in prices at the pump, has put more money in Americans’ pockets.
There’s no reason not to take the money you’ve earned and invest in a permanent place for yourself.
With an improving economy, there comes the other side of the coin for those in the market to buy a home. This brings me to point number three.
3. Home Values Are Rising
According to Quicken Loans Home Value Index data for November 2014, home values have increased by 3.68% since this time last year. With the continued recovery of the economy, home values will only keep rising. This is true across all regions and every major metropolitan area in the country. The sooner you buy, the better.
4. High Rent
A short-lived candidate in the New York gubernatorial race named Jimmy McMillan once based his entire platform around this statement: “The rent is too damn high!”
While it’s recommended that you spend no more than 30% of your monthly income on rent, it may not be possible to stick to this threshold and get the space you need in some major metropolitan areas.
According to data from RealtyTrac, the average household in the Bronx spends almost 66% of its monthly income to rent a three-bedroom house. Other high-rent cities include Philadelphia, Brooklyn, Baltimore and Miami. Renters in those cities spend nearly 50% of their monthly income on rent!
If you’re growing your family and need more space, it may make more sense to purchase rather than rent a home. This gives you control of your own property while letting you build equity in the home. It’s certainly better than giving your money to a landlord.
We realize this is kind of an evergreen reason to buy a house. However, the perks of ownership should not be forgotten.
Owning your own house gives you equity in the property. You build equity as you continue to make payments. It’s important to view this as an investment. Down the line, you can refinance to get a lower monthly payment or fewer years on your mortgage. You can also put your equity to work for you with a cash-out refinance, if you choose.
Ownership can also save you money on energy bills. You can make energy-efficient home improvements, such as installing solar panels and insulation, that you probably wouldn’t be able to make in a rental property.
Perhaps most importantly, instead of making that monthly payment for a place to stay temporarily, you’re making an investment in a place where you can watch your children grow up in the front yard.
Are you looking to buy a house in the near future? What are you most looking forward to about owning a home? Let us know in the comments section.
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