If you’ve been on the fence about buying a home, 2016 is the year to take action.
Mortgage rates have been bouncing around record lows for a while now. But even though they’re likely to start going up, you haven’t missed your chance to get a deal on a house.
A number of factors are coming together, making next year a good time to buy:
Home Prices Will Finally Calm
Real estate values have been on the rise for a while, but are likely to slow their pace next year. Prices are expected to rise 3.5%, according to many economists.
Buyers who’ve been stuck behind the wave of rising prices may finally get the chance to jump in, and that could lead to a flood of buyers.
However, jumping into home ownership isn’t great for everyone. Despite the slowdown, it is still expected that home values will outpace wage growth, which can make it tough to afford a home, especially for lower-income buyers.
More Homes Will Hit the Market
The slowdown in home prices will prompt more owners to stop waiting and finally list their homes, giving buyers more choice.
The new home market is also expected to grow in the coming year with builders focusing more on starter and middle-range homes, which will also boost inventory and make it easier for buyers.
Cheap Mortgages Will Become a Thing of the Past
The Federal Reserve is widely expected to begin increasing interest rates soon, which means the window for record low mortgage rates is closing.
While rates are expected to go up gradually, higher rates push up borrowing costs and monthly mortgage payments so the time to act is now if you are able to afford it.
Rent Will Still Be Tough
Rent prices are expected to continue to climb in the new year, which means buying will be cheaper than renting.
Even though mortgages could get more expensive, buying might still be the better deal. Interest rates would need to rise to around 6.5% for the cost of buying to equal that of renting on a national level.