Still a Good Time to Buy

    This entire week has been predicated on the fact that waiting to buy a home instead of purchasing one right now is a bad financial move. We have discussed how we believe that waiting to purchase your home can cost you upwards to $300 more per month (when purchasing a house that is worth $250k today, of course). We have even discussed the negative impact waiting can have on your retirement 30 years from now. Truth be told, there are many reasons to avoid waiting, but today we are going to take a bit of a different approach. Today we are going to explain why buying today is a positive thing as opposed to waiting being negative. Kevin Kelly, Chairman of the National Association of Home Builders (NAHB), recently said that:

    “With interest rates near historically low levels and strengthening job growth, now continues to be a great opportunity to buy a home.”

    We honestly couldn’t agree more. While we have mentioned that waiting could cost us because of rising prices and interest rates, buying a home today helps increase your net worth now. There are two organizations that look at the affordability of purchasing and actually measure it over time. The NAHB has their Housing Opportunity Index (HOI) while the National Association of Realtors has the Housing Affordability Index (HAI). Both indexes report the same thing. The cost of buying a home is beginning to increase leading the affordability indexes to dip. Both indexes have said that we have passed the bottom of the housing market. This means that home values have nowhere to go but up. According to NAHB’s HOI housing affordability dipped slightly in the 2nd quarter of 2014. Chief Economist for NAHB, David Crowe explains:

    “The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom.”

    Michael Hyman of NAR showed that home affordability is down from both 1 month ago and 1 year ago by saying:

    “At the national level, housing affordability is down for the month of June due to higher prices and qualifying income levels despite the lowest mortgage rates of the year.”

    The Wall Street Journal also got in on the action recently in an article starting that the cost of home ownership is higher than any time in the last 5 years:

    “Housing affordability hit its lowest level in nearly six years in June as home prices continued to climb.”

    So, what does this mean for the average buyer? It means that if you are waiting for the market to bottom out it has already passed. Instead of waiting for the market to bottom out again you should be thinking about how purchasing a home today will allow you to start building immediate equity. Buying a home today not only allows you to avoid higher home prices and higher interest rates, but it allows you to secure your payment amount while increasing your net worth by building equity.

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