If you’re thinking of buying a home in 2018, are you better off doing so now or waiting until later in the year?
Let’s review a few facts about our market. Currently, our level of inventory will likely remain low throughout 2018. Over the past 12 months, home prices have appreciated by about 12% and interest rates have remained at historic lows, which has allowed many buyers to enter the market.
Because of this, sellers will most likely be concerned about short-term prices—in other words, where home values are heading in the next six to 12 months. As a buyer, however, you should pay more attention to the long-term cost of a home than its price.
The Mortgage Bankers Association, Freddie Mac, and Fannie Mae all predict that interest rates will increase by this time next year. According to CoreLogic’s most recent home index report, prices are expected to appreciate by 4.7% over the next 12 months.
If home prices do appreciate by 4.7% during that time span, a $250,000 home with a 3.9% mortgage and a monthly payment of $1,179 will increase by the fourth quarter to costing $261,750 with a 4.6% mortgage and a monthly payment of $1,342. That’s a difference of $163 per month, $1,956 per year, and $58,564 over the course of 30 years.
The bottom line is if buying a home is a part of your plan for 2018, doing so sooner rather than later could save you thousands of dollars over the term of your loan.
If you have any questions about today’s topic or you’re thinking about buying or selling a home, call or email me for a free real estate consultation that will give you the competitive edge you need. I’d love to help you.