Time to Buy That Beach House?
If we want information about the state of
the housing market, the National Association of Realtors seems like a good
place to start. According to them, it's a great time to be looking at making a
purchase. Interest rates are low and so are home prices. However, while prices
are still lower than usual, how long they'll remain that way is difficult to
know. In fact, the national average sales price for houses rose by ten percent
in February and March compared to the same months just a year ago.
On the other hand, there might be more
potential buyers out there than would normally be expected. That same lack of
available housing means that rent rates are increasing rapidly. If you could
realistically purchase a house with a lower monthly mortgage payment than what
you're paying now for rent, why wouldn't you be interested in owning your own
home? And just like many sellers have been waiting to see what happens in the
housing market, buyers have spent a few years parked on the side of the road to
see if the traffic clears. Now that it has, and the price of the average home
is down, they're putting the car in drive and getting back on to the highway.
So we have a glut of buyers hoping to land
a property for cheaper than it might end up being worth, but also a lack of
homes available for them to choose from. That doesn't sound like a market that
will remain inexpensive for long. And it won't. Of course, as the prices go up,
more of those hesitant sellers will begin to put their house on the market
since it would now fetch a price more to their liking. So that side of it would
seem to be fairly self-balancing, though certainly at a price level higher than
what we're seeing now. That brings us to interest rates.
And interest rates remain the great unknown
in all of this. Rates are currently low to try to spur the sort of increase in
home purchases and new construction that we're beginning to see. How long rates
will remain that low is the mystery. At what point will the recovery be
declared secure enough that they're bumped up a notch or two? We simply don't
know.
