If buying a home is on your mind – or in your plans in the next few years – you might think about moving those plans into 2019. Due to rising home prices, the affordability of homes in 2019 and beyond is coming into question, even in low and middle markets that have traditionally not been impacted by soaring home prices like larger, metropolitan areas have.
TWO THINGS ARE HAPPENING RIGHT NOW IN THE HOUSING MARKET:
1. Mortgage Rates are Trending Upward Overall
Even with a slight dip to 4.51% in January 2019, many predict that mortgage rates will climb above 5% for the first time since 2011.
2. Home Prices are Also Trending Upward
According to the Federal Housing Finance Agency (FHFA) House Price Index, home prices rose 6.9% between the 3rd quarter of 2017 and the 3rd quarter of 2018. This upward movement in-home price is likely to continue.
According to the National Association of Realtors, home sales are expected to flatten while home prices will increase, although more slowly than in recent years. The number of houses for sale may continue to be a concern, due in part because of population growth and job growth that is not matched with an increase in homes being built. Simply put, there’s a stronger job market, a shortage of properties, and that will likely lead to an increase in home prices nationally.
One silver lining for those looking to buy? Buyers will have more inventory to choose from as they decide which home is right for them. What’s more, the entire market is showing a steadier outlook, which should encourage first-time home buyers and others to make solid offers and have a greater degree of confidence that they can afford the loan.
Should You Buy a Home?
Purchasing a home is one of the most important financial decisions you can make for yourself and your family. It’s a very individualized process that’s based on a number of factors including the stability of your employment and your prospect for advancement, the amount you have saved for a down payment, and your debt-to-income ratio.
Before you dive in, it’s important to set a budget – that includes a down payment, money to cover mortgage payments, property taxes and upgrades. This should also include an additional reserve of funds for large expenses you can’t predict – like broken appliances, a roof leak or a backed-up sewer line. Having these resources available and ready will help ease the transition to homeownership and give you greater peace of mind as you take this next step in life.
Do you have questions about your financial situation and ability to purchase a home? No matter what stage of the home buying or home owning process you’re in now, it’s important to have trusted advisor to answer your questions and create a plan that’s best for you and your financial situation. At FirstBank Mortgage, our goal is to help our customers get to a better place – whether that’s in a new home or a new financial position. For more information, contact your local loan expert.