Did you consider buying a home but were on the fence about it, unable to commit to buying? It may just be time for you to get off that fence and make a move. Yes, the real estate market has its ups and downs, its cycles which are inevitable. But the cycle appears to have reached a fairly favorable point for home buyers. So let's consider why buying real estate may be the best time now.
1. Low-Interest Rates
Interest rates for mortgages are still relatively low (as compared to what they were), but there is no way to predict how long that will last with any certainty. Interest rates have slightly risen from historic lows a few years ago, but they still remain low enough to make purchasing a house pretty attractive.
Today, interest rates for both 30-yearand15-year fixed-rate mortgages are just above 3 per cent. Nevertheless, rates could increase at any time with the Federal Reserve's current trade problems and future antics. And now would be a good time to buy property before the mortgage rates increase significantly.
You could save tens of thousands of dollars over the life of the loan by buying now and getting locked in at the current low rate. Take this example . . .
“Let's put your principal on mortgage at $200,000. When you negotiated your mortgage at an interest rate of 3.87 percent, the total interest you will pay in the course of the loan would be $138,571 ($940 360 monthly payments, for a total of $338,571). Today, if you received a 5 percent interest rate mortgage, the total interest you will pay during the loan rise to $186,153, a $43,581 increase.”
2. Rising Prices
Another reason to buy property right now is because home prices are still rising. We rise at a slower rate than they were a year or so earlier, but they are still growing. So why would you wait until home prices get even higher, as they will inevitably because the trend shows no signs of halt?
In 2017, home prices rose by about 5 per cent and in 2018 by about 3.5 per cent. So the rise happens at a slower rate, but still occurs. If you are waiting, then you will wind up paying more for a home than you would if you were buying now. And don't forget that interest rates are likely to go up too, as we have described, so waiting gets even more costly.
3. Low Inventory
Moreover, there is still a small inventory of real estate-there are just not enough homes to go around right now. Which means there is a keen competition which pushes prices even higher.
And this low-inventory problem doesn't look like it's going away any time soon because new construction is still stagnant quite a bit. And keep in mind that when interest rates rise, "people are less likely to market their homes in an effort to preserve the lower interest rates on their mortgages." Inventory then remains low (at best) or even further decreases.
So, again, the time has come to buy property. It is just this low inventory that makes a good agent's services even more important.
4. Tax Benefits
A very good reason why buying real estate now may be the best time is so you can start enjoying the tax benefits. Even with recent tax law changes, tax rates favor homeowners and ownership continues to be a good tax shelter.
You can deduct your mortgage interest at tax time, which in the early years represents the lion's share of your mortgage payment. You just have to make sure that the balance of your mortgage loan is less the price of your home. Therefore, the mortgage interest is deductible up to the new cap, and you are saving money on taxes.
Another significant tax advantage associated with homeownership is the property tax deduction. Even with the new cap, this could lead to significant savings if you live in a high-tax area – another reason for buying real estate now.
5. Appreciation
Despite the relatively recent immovable fiasco, real estate remains a sound investment in the long term. Of course, real estate has its fluctuations, sometimes up in value and sometimes down, but almost always appreciates and increases in value over the long haul, say, 30 years. The simple fact is that real estate has appreciated steadily over the years-but it's a long game.
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