The recovery of the 2020 housing market has been nothing short of remarkable, and many experts agree. The turnaround from the nation’s economic pause earlier this spring is playing out extremely well for housing. It’s framing up to be an ideal time to buy a home for those who are ready to make a purchase this fall. Here’s a dive into some of the biggest wins for homebuyers this season.
1. Low Mortgage Rates
Earlier this year, mortgage rates hit an all-time low, falling below 3% for the first time ever. Continued low rates have set buyers up for significant long-term savings, and they’re making homes more affordable than they have been in years. Realtor.com agrees, noting, “Given this means homes could cost potentially tens of thousands less over the lifetime of the loan.” Essentially, it’s less expensive to borrow money today, so even as home prices rise, low rates are offsetting the long-term costs associated with a mortgage. This is a huge savings for buyers to capitalize on right now.
2. Buying Is More Affordable Than Renting
According to the National Association of Realtors (NAR), low mortgage rates have also made the typical mortgage payment less expensive on a monthly basis than the average rent: “The major factor is, arguably, low mortgage rates…With rates so low that are locked in under a 30-year mortgage, the typical mortgage payment, estimated at $1,036, has fallen below the median rent, at $1,045. For potential home buyers who were thinking of purchasing a home anyway before the pandemic outbreak and who are likely to remain employed, the low mortgage rate may be the clincher.” When paying a mortgage, as opposed to paying rent, that money is reinvested back in your favor as a homeowner. So, instead of contributing to your landlord’s savings, you’re contributing to your family’s own net worth. This is a term called equity, and it is one of the biggest financial benefits of owning a home.
3. Equity Is Growing According to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity, and 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. In addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a tremendous amount of forced savings for homeowners in the current market. With this much equity in place for the average homeowner, the chance of the market seeing a rush of foreclosures is not likely. Homeowners today have many options to avoid foreclosure, such as selling their homes and leveraging that equity to stay afloat. As a buyer, you can rest assured that your homeownership investment is a sound one, and foreclosures are not expected to dominate the market as they did when the housing bubble burst over 10 years ago.
4. Home Price Appreciation
According to leading experts, home prices are forecasted to continue appreciating. Knowing that home values are rising should help you feel confident that buying a home this year is a strong long-term investment for you and your family. If you’re concerned about making such a large purchase, keep in mind that today’s low mortgage rates help offset rising prices for buyers. As Ali Wolf, Chief Economist at Meyers Research notes: “Even as prices go up, the price gains are offset by the continued drop in mortgage rates.”
5. Changing Homebuyer Needs
Chances are, you’ve recently spent a lot of time at home. With stay-at-home orders in full effect earlier this year, you likely had more time than ever to get familiar with your current space. Whether you’re renting now or looking for a move-up home, you’ve probably identified a laundry list of things you’d like to change about your current home. If so, you’re not alone. There are endless reasons why people are moving this year. Across the country, features like home offices, gyms, and more indoor and outdoor space are much more desirable features. Maybe you also have children at home who need a space to focus on virtual schooling. What’s on your wish list?