The Fed has been steadily increasing interest rates since the beginning of the year and on June 13, the Fed again raised interest rates from 1.75 -2% which sent financial markets into a spiral and worried potential home buyers. The Fed cites the improving economy as the primary reason for raising rates. Take our advice, there is no reason to panic, the economy has been showing improvement year after year and now unemployment is at a historical low and expected to drop even further this year.
Here are three reasons why buying a home right now is still a great idea:
1) Interest rates are still at historically low levels and despite steadily increasing interest rates, people are still buying homes. According to Bank Rate, the average 30 year fixed mortgage rate is 4.76%; in May 1998 the average 30 year fixed mortgage rate was 7.14% and in May 1988 30 year fixed mortgage rate was 10.46%. When compared to previous rates, its easy to see that now is still a great time to buy a home. Interest rates may continue to increase, so the best way to lock in a great deal is buying sooner than later.
2)The biggest issue in today’s housing market is supply. Due to favorable interest rates and a low inventory of homes for sale, the typical house has multiple offers within just days of being listed on the market; some homes even have multiple offers even before officially being listed as for sale. Be savvy, make an offer on a home you like now while interest rates are still low.
3) Owning still beats renting. There are a number of reasons that owning is better than renting, especially if you’re going by the numbers! If you plan on living in the same home for 4 years, you stand to spend less money buying than you do renting even considering closing costs, increased utilities and the 20% down payment. Trulia has an online tool that makes evaluating this decision for yourself very easy.