When was the last time you heard that mortgage rates would hang out at 3.85%? Well, this year is our lucky year. According to Rusty Tweed, all forecasts from major realty companies and mortgage and finance experts say that it’s a trend that’s here to stay this year. The market is back up to par for buyers. In fact, if you’re concerned about how far housing prices will rise, it’s only set to move 0.8% according to Realtor.com.
First-Time Buyers:
As, with everything there are drawbacks. First-time buyers can expect to see less home availability at a price they can afford. One of the valuable things that we used to have is the starter house. The one-bedroom home that families and first-time-buyers could live until they outgrew it. They no longer build those and the average home has at least 3 bedrooms at a price that first timers may struggle with.
They still set the rate of home buying to rise by 2% and may reach 5% this year, despite the lack of availability for some. So what’s responsible for this? Low interest rates and a booming Millennial market. We also have more disposable income because of a booming economy but this is all a Catch 22 when you look at it. Yes, we have more money to spend but that doesn’t mean the homes you find will be in your price range.
The Vicious Circle of Free Money
According to the Case Shiller Home Price Index they have the US housing prices at a unique high of 218.27 index points. So, what’s the vicious circle that this ‘free money’ phenomenon starts? The free money in question is an attractive interest-rate. But, that means your disposable income is like paper without value.
It means you’re standing there, holding a blank checkbook full of non-negotiable instruments. Why? Because the seller can ask for higher rates. This takes the waiting period to an all-time-high. So, if anyone buys a home from a seller that’s not in panic-mode it’s next to impossible. Sellers don’t have to negotiate much in this market. So while it’s good for buyers in some senses, it’s not in the sense that counts.
Should we look for a Housing Bust of 2007 on the Horizon?
We can’t say for sure but according to Dan North, chief economist at Euler Hermes North America it’s a resounding no. In brief, here’s why. Mortgages that were questionable caused the housing bust. Today, we don’t have those actions going on at the same rate as before. Not enough to sway and tank an entire market.
If the housing market stabilizes which is what’s being forecast for 2020, then the market may see a correction. Everything levels off . So maybe, if you haven’t found your dream home yet, wait until mid to end of 2020 to buy. This may or may not make much difference though.
The Takeaway:
Be sure that you give yourself enough time to search and negotiate. Think outside the box. Sometimes people facing foreclosure will take a deal before things get rough. With the right guidance like Rusty Tweed , you can get a great deal and a dream property in a market like this. Make 2020 your dream year.