Now is Still a Great Time to Buy
/Since 2012 I’ve been talking about the home affordability index and why buying a home now is a great option (prices of homes being lower, interest rates continuing in all-time low ranges, all combined with stable to rising income levels). Granted with the increase we’ve seen in housing prices over the past 2-3 years, the affordability index is not as good as it once was. But the lower interest rate environment is still giving us a great opportunity. As a simple example, if a home can be purchased today at $200,000 with a 30 year fixed rate of 4%, it would provide a payment that is $271 lower per month versus buying that same home 2 years from now if the value of the home has increased to $216,000 (4% appreciation rate) and rates have increased to 5.5%. I know you see stats like that all of the time. But that is a pretty significant number – especially when the example given here is pretty conservative (I could easily see homes appreciating at a 4% clip over the next two years and rates could easily be at 5.5%, which is still very low, two years from now). It’s almost the equivalent of adding a car payment to the mortgage when you think about it in relevant terms.
So I thought it would be great to provide a couple of really good visuals that you are able to share with clients who are debating buying a home right now. The first chart shows the average interest rate per year for the past 30 years and the second chart shows the appreciation rate by state from September 2014 through September 2015. It’s very eye opening when seen in this manner.
Click Here for the 30 Year FHLMC Rates On 30-Year Fixed-Rate Mortgage Chart