No one can predict the future, or what will happen to housing values, so how can you tell if now is the right time to buy a home? The simple answer is: If you find a house you love—and can comfortably afford—then it's always a great time to buy.
Conditions are certainly ripe for buying a home, with record-low interest rates, and skyrocketing rental costs. Let’s look at some of the well-known advantages to owning your own home:
- Your home can build equity
- You are eligible for homeowners’ tax breaks
- Your home can be used as a rental or Airbnb property
- Your payments will remain stable
- You can decorate and remodel as you please
To be fair, becoming a homeowner has some drawbacks—maintenance costs, market risks, property taxes and mortgage insurance—but, the advantages outweigh the downside for most buyers. As experts predict the steady increase of rental rates in the next few years, with over 85% of property managers having raised their rents in 2015, being a “renter” is still seen as a no-win situation where residents build no equity and can expect their monthly payment to increase as soon as a lease expires.
If you are a looking to compare financial trade-offs, you will appreciate the New York Times’ Buy Vs. Rent online calculator, which provides a comparison using your specific financial data. You’ll find that your answer hinges on the length of time you plan to live in the house you’re planning to buy. The longer you plan to stay, the more sense it makes to buy, because the upfront and closing fees will be spread out over the years. Anyone planning to live in a home for five years or more would be better off buying, according to the experts.
You would also be wise to consider an older home or one in need of cosmetic repairs, as these kinds of properties offer better value, and you may find a diamond in the rough that will yield high returns. Another compromise worth investigating is location. You can often find a more affordable home that meets your needs by choosing a house that is in a less popular or central neighborhood.
If you know what you want, and you know how to get it, then you are ready to buy a house. There will never be a better time to invest in a home than when you are ready, willing and able. If you’re not sure where to start, you’ve come to the right place, because Open Listings can offer some great advice for buying in a competitive market.