It's a Great Time to Buy
The housing market is experiencing a cooling-off period from the boom of several years ago, making today’s
economic environment the perfect one in which to buy a home. Low rates and new housing choices meaning more
opportunities for home buyers. The Home Builders Association has gathered a list of questions to help consumers
discover why in today’s market, now is the time to buy.
There have been a lot of stories about home prices dropping. Should I wait until prices go lower
to buy a home?
The stories you're seeing about home prices dropping on the national level are from markets in booming locations
such as California and along the coasts where home prices have soared as much as 40 percent in recent years. In
Kansas City, housing values have increased at a more moderate pace, and continue to go up now even as some
parts of the country are seeing a decline. New-home values are up more than 5 percent in metro Kansas City this
year and forecast to increase again next year. If you're waiting for prices to drop in metro Kansas City, it may cost
your family more money to make the move to homeownership down the road.
Why would delaying a home purchase now cost me more money later?
With new-home prices continue to go up in metro Kansas City, waiting to buy a new home simply means the price will
be higher down the road. Another major factor are mortgage rates. Mortgage rates have fallen in recent months to
the point where they are actually lower than they were a year ago for fixed-rate mortgages. Economic forecasters
expect mortgage rates to go up in 2007, which means your buying power will be decreased -- you will have to pay
more for monthly mortgage payments and will qualify for a smaller loan amount. The combination of rising prices and
rising mortgage rates are a double whammy for consumers. That makes taking advantage of low rates and current
prices is crucial to saving money.
Is it better to wait until the economic picture is clearer so my house will appreciate?
No. The fact is, the economy is still solid. After expanding rapidly over the past few years, economic growth is
moderating – and this is actually good for housing. Most economists predict that overall GDP growth will average
about 2.5 percent for the rest of the year. That means that job growth will continue to move forward at a pace that
should not trigger higher inflation or interest rates. This period of moderate economic growth, job creation and low
inflation, coupled with a true buyer’s market where there are plenty of homes to choose from, makes this an ideal
time to purchase a new home. Kansas City has added more than 30,000 in the last two years, including more than
10,000 in the last 12 months.
Isn’t it better to “play it safe” and keep renting until things are more certain?
No. The best way to “play it safe” is to actually buy a home. And here’s why. Studies show that owning a home is the
best way to builder household wealth. The sooner a person owns a home, the faster they begin to build up equity
and wealth. When you buy a home, you are also purchasing price stability, knowing that you will pay the same
monthly payment for the life of your 30-year mortgage. With fewer apartment rentals on the market and rents on the
rise, renting lacks economic security, tax benefits and price appreciation. All of the economic fundamentals show
that this a good time to buy a home and that there is upward pressure on rental apartments. The real risk isn’t in
buying a home, said NAHB, it’s continuing to rent.
Should I invest my money in the stock market or use it to buy a home?
Buy a home! Thanks to the concept of “leveraging,” purchasing a home is by far the best long-term investment.
Leveraging means putting down a small amount of money to earn a big return. As a homeowner, your savings
continue to grown in two ways. Every year, a greater portion of your monthly mortgage payment goes to principal,
reducing the overall loan amount. Second, your home appreciates over time, making it one of the very best financial
investments. Not only is homeownership a stepping stone to a future of financial security, it also helps build
neighborhoods and strengthen communities. It is truly the cornerstone of the American way of life, and the fulfillment
of the American dream.
Should I wait to buy a home until interest rates go down further?
No. Interest rates currently stand at about 6.4 percent and are extremely favorable for buyers. In fact, they are
hovering near 30-year lows. But waiting to time the market is a dangerous – and losing – game. Because interest
rates are near historic lows, it is much more likely that they will head higher in the future as opposed to moving even
lower. And home prices don’t necessarily move in unison with interest rates. With interest rates low, home prices
down, a strong and diverse supply of houses builders offering incentives, the smartest and safest time to buy is now.
Any or all of these favorable variables could change for the worse.