August 2022 | Home Building News
The timing of buying a home is a question that every prospective homeowner faces. In today’s economy it seems everything from popular cryptocurrencies to major tech firms and corporations can easily plummet in value overnight. There is however, no reason to assume that real estate markets will follow this same volatility.
Homes Keep Their Value
Real estate in Montgomery and Howard County is a historically safe investment. In past recessions, area property values have slowed their increases, but they never lose value. In a ‘slow’ market, local listings may spend longer on MLS, but the value doesn’t decrease.
The Market is Still Active
National trends show there are still far more buyers than homes for sale, a condition experts expect to remain for the foreseeable future. While the bidding wars may have subsided for now, prices in the long term will continue to rise, and availability will continue to be limited. These conditions make homeownership a powerful wealth-building tool.
This is Not the Time To Wait
While increased home prices may seem like a logical reason to hold off purchasing, market history suggests otherwise. The cost to build a new home has greatly increased in part due to supply chain issues in the manufacturing and delivery of materials. Items such as cabinets, windows and appliances which were previously available in weeks, can easily take 6 to 12 months to arrive. Even as markets balance, prices for these non-commodity items traditionally do not decrease in price. Many of these increased costs are here to stay.
Interest Rates are Still Historically Low
Contrary to common perceptions, interest rates are still at historical lows. While average interest rates were as low as 3.25% a year ago, an average rate of 6% is incredibly low when compared to the past 50 years. An average interest rate in the 1980’s was typically around 17%. And this week, we are finding 4.99% interest rates for construction perm loan products.
Affordability relates to your monthly payments, not the purchase price of the home. With interest rates this low, buyers can spend freely on their new home without considerably affecting their mortgage payments.
Down Payments are Still Low
The upfront down payment is often one of the hurdles facing home buyers. However, construction perm lending options are still offering 5% down payments, and 10% no PMI (private mortgage insurance) down payments.
There is a truism that the best time to buy a home is ‘yesterday’. This is because the costs of land and construction are generally increasing. No matter the home prices or rates, the best time to buy a house is ‘as soon as possible,’ when you are financially ready.
Reach out to us online, or call our team at 301-256-4110 today to discuss your next steps, and what we can do for your family.