2013 - The year of reduced home purchasing power?
As the economy and unemployment numbers level off and improve in 2013, along with this we’ll see the housing market improve. Buyers and sellers will be less reluctant to take the plunge into homeownership as they feel more comfortable about their job security and the economies continued rebound. This also gives more comfort to those that have been waiting to list their homes without the fear of having to take a haircut or even selling it at all.
All of this creates demand for housing which increases the home prices. As a buyer, the sooner you can get to the market the better. As demand increases, the deals of yesteryear will be gone as competition increases. Fewer and fewer short-sales and foreclosures are hitting the market and reducing the supply and housing options available.
We also have a wild card of Generation Y in the mix. Did you know that this generation is almost as large as the baby boomers? Our economy is becoming more and more reliant on this generation to create new jobs and put the dollars earned back into the economy. These are individuals in their 20’s and early 30’s just starting their adult lives. Careers are becoming more stable and moving out of Mom & Dad’s basement is becoming more appealing. As the burden of student loans eases for these individuals, larger purchase decisions will begin to take place. Oh, and they are getting married which leads to….buying a home in many cases.
With housing improving, the government will also ease their mortgage backed securities purchases and allow interest rates to creep up slowly since the market will be less reliant on low interest rates to spur activity.
So, what can you take from this? Higher demand and higher interest rates are here and if not, on the horizon. This equates to less buying power for the home buyer. Real estate agents and mortgage professionals, I believe, agree that buying sooner rather than waiting is a safe bet going forward. Home sellers will enjoy the low supply and home purchases still get a mortgage at what very well may be the lowest their see in their lifetime.
When choosing a real estate professional it's best to stick with someone local who understands the marketplace. Meeting with these individuals will also help in building your trust and relationship that you'll be able to utilize as consultants going forward whether you're in the market to buy or not.
*Remember, rates are extremely low and a huge percentage of the mortgage transactions taking place are refinances. Consult with a mortgage expert to see what you may be able to take advantage of now before it's too late!