The housing market isn’t a subject that often enters regular conversation. However, it is something that more of us should be aware of. If you are interested in buying or selling a home, or simply interested in the well-being of your current asset, you need to know more about the housing market.
How are Current Home Prices?
As expected, home prices have increased during 2015 with most homes currently being appraised at 10 percent over their value. Cities that are currently experiencing the highest levels of home appreciation and will continue to do so through 2016 include major cities such as Miami, Seattle, and San Francisco, as well as smaller cities such as Naples, Florida, Eugene, Oregon, and Austin, Texas.
Higher valued homes mean that it is currently a seller’s market, and unfortunately, home prices are only expected to increase through 2016. For those who are still holding out for a buyer’s market, they may be out of luck. While home prices are expected to peak in 2016, they are expected to stay steady through 2022 which means it could be a long time before we see a housing market that truly favors the buyer.
How Easy is it to Obtain a Mortgage?
Mortgages are actually less accessible this year than they were last year. The added difficulty of obtaining a mortgage isn’t necessarily because of higher interest rates or strict mortgage terms, the reason for less accessible mortgage loans is due to high housing costs. While housing prices have increased, wages haven’t. This means that interested home buyers are having to save more on the same budget simply to pay the down payment needed to receive the favorable interest rates and mortgage terms they desire.
Although the higher home prices make it more difficult to afford home ownership, interest rates are actually fairly low right now and are expected to maintain throughout 2016 and beyond. For buyers, low interest rates make home ownership more affordable in the long run, and mean that more of each mortgage payment is going towards your principal balance instead of interests.
What Should I Do in this Housing Climate?
If you are looking to buy a home, expect to pay a little more than you would have a couple of years ago for the same home. The price of housing, both homes and rental properties, is going up which can make securing a loan with the right interest rates and mortgage terms more important than ever. Before applying for a loan, be sure to take the time needed to secure the best credit score possible and to properly save for a 20 percent down payment. Doing so in advance will give you greater power as a borrower and make it easier to not only obtain approval, but also the best interest rates and mortgage terms.
If you are considering selling your home, now is a great time to do so. Although the market isn’t in the same seller’s boom that it was a couple of years ago, it still highly favors buyers and you can expect to sell your home for more than you paid. However, if you aren’t comfortable with selling your home only to have to turn around and purchase one at a higher market value, consider either refinancing to a lower interest rate or securing a reverse mortgage.
If you aren’t buying or selling your home, the current housing market also offers you several perks. If your home continues to appreciate, the equity in your home will only increase. With the equity you build in your home, you can take out an equity line of credit which can be used to make home updates, pay off credit cards, start a business, or even take an extravagant vacation. Refinancing to a lower interest rate may lower your monthly payments and increase the amount of money you have leftover in your budget. Reverse mortgages are another home finance option available to homeowners 62 years and older and can bring added monthly income to your current fixed income. With a reverse mortgage, homeowners who have built equity in their home are essentially able to receive payments from the lender while still maintaining ownership of their home.
The housing market is predicted to remain steady over the next several years. While the consistent buyer’s market may be frustrating, the stability in the market is actually beneficial and the product of several laws and regulations that have been put into effect over the last couple of years. With a more stable housing market, borrowers can expect more consistent buying and selling conditions, and more consistent interest rates and loan terms – and not have to be fearful of lenders.