Perspective home buyers have enjoyed the benefits of a buyer’s market for the past 6-7 years. With an abundance of homes for sales and falling prices, it almost made more sense to wait to buy a home. Most buyers don’t realize that those days are rapidly coming to an end. The real estate market is quickly transitioning from a “buyer’s market” to a “seller’s market”, where home prices increase dramatically and selection shrinks to next to nothing. One need only look back to 2005 and 2006 to be reminded of just how difficult it was to find the right home at a reasonable price. The writing is on the wall. Consider the following:
• New home sales were close to a 5-year high in November, as builders responded to pent-up demand unleashed by employment gains and record stock prices, according to NAR Chief Economist Lawrence Yun.
• According to Case-Shiller, national home prices rose 11.2% in the third quarter compared to the same period a year earlier. This was the biggest year-over-year advance since 2006!
• Further gains in hiring, household wealth, and consumer confidence are also helping boost the housing recovery.
• The National Association of Realtors predicts when final numbers are calculated, 2016 will be the best year in the industry since 2006, with over 5.1 million closings.
• Daniel Silver, an economist at JP Morgan Chase & Company in New York predicts that housing will continue to grow at a solid pace in 2016.
Although this news paints a rosy picture for economic recovery, it also indicates much higher prices for buyers. And coupled with rising interest rates, the situation could be even worse for buyers who delay their purchase. The average rate for a 30-year fixed rate mortgage a month ago was 4.48%. Compare this to 3.5% a year earlier.
There you have it! Wait a little longer to buy a home and you’ll pay a lot more to get a lot less.