Should you buy a house next year? This can be a difficult question to answer because conditions tend to fluctuate based on what city you live in. You also have to consider your personal preferences and how they may affect the home buying experience.
While it may not be possible for someone to tell you if 2016 will be a good year for you to buy a house, you can decide yourself based on some simple information.
Conditions Vary: It Depends on Where You’re Located
First time buyers can often become overwhelmed by all of the information thrown at them when they are searching for a new home. The first thing to consider when you begin the hunt is that trends and conditions can be very different from one city to the next.
National news stories that talk about the state of the housing market should be taken with a grain of salt. It’s simply impossible to get a good idea of the market where you live without doing local research and teaming up with a seasoned real estate agent who works the niche market that you’re looking in.
Take Atlanta, Georgia for example. Zillow reported that the home prices there rose by more than 11 percent in 2015. They also expect prices to continue to rise by over five perfect by the middle of 2016. Then compare Atlanta to Orange County, California, where prices have declined by almost two percent in the last year. Homes in Orange County are also expected to continue to lose value in the coming months. See the difference?
Housing markets all over the country vary so wildly that it is impossible to predict how your market is doing without looking at numbers from a local source.
No matter what the market in your area looks like, keep the following in mind: If prices are rising quickly, buyers will feel pressured to put in a bid on a house more quickly. Buyers that do not act with urgency will often be left out in the cold. “Flatter” markets allow potential buyers a chance to shop around and get the best deal on their perfect property. In Brevard county, different areas and price points have different market dynamics. Only an experienced agent can succinctly explain which sectors of the market are rising or are flat.
The Year Ahead: Will Home Prices Level Out in 2016?
Despite major differences from market to market, one trend seems to apply to the majority of them. Experts predict moderate or no gain in property values from 2015 to 2016. Many cities across the country are seeing a plateau in home values, with as little as two percent in growth predicted nationally in 2016. Comparing this to recent years, 2016 may well turn out to be a buyer’s market.
While price is the main consideration for many new home buyers, it is not the only important part of the puzzle. You must also consider your employment history, whether you are likely to remain employed and the state of the job market in your area in general.
Staying Gainfully Employed: Conditions Have Improved Nationally
The national job market has seen great improvement throughout 2015, with the unemployment rate dropping to less than six percent. With more jobs, the likelihood of a potential home buyer to stay gainfully employed is looking up. In Brevard, we are fortunate to have so many new companies hiring, adding to our healthy economic conditions.
However, it is still important to focus on the local market. How do unemployment statistics in your local area stack up to national averages? Is there ample opportunity to find a new position if you lose your current job? If you are confident in the job market in your area, it may be a good time to buy a home.
Mortgage Rates: If They Go Up, Will My New House Stay Affordable?
Mortgage rates are one of the only national trends that home buyers should be paying attention to closely. Changes in these rates are extremely important to potential new buyers in 2016. In addition to affecting the monthly affordability of a home loan, they also affect the long-term cost of the home. Lower interest rates mean you pay less for your home over the lifetime of a mortgage.
Could rising interest rates put home ownership out of reach for you? This really depends on how much home you can afford in the first place.
Freddie Mac expects the 30-year average rate to be above five percent by the end of 2016, a full one percent higher than the average in 2015. This might sound daunting, but five percent is still a decent rate on a 30-year loan. With interest rates expected to continue to rise, it may be a good idea to buy as soon as possible to lock in an affordable rate.
Putting it All Together: Should I Buy a House in 2016?
Is 2016 your year to purchase a home? That depends on your individual circumstances. If you love the area you live in, have a stable income and your employment prospects remain favorable, 2016 may well be a great time to buy a house.
Keep an eye on local real estate listings, noting prices and current trends. Arming yourself with this knowledge will help you pick the right time to buy and help you to know when your potential dream home is overpriced. The Carpenter / Kessel team can help guide you in this process.
If you live in an area where values are expected to rise in 2016, it might be better to buy a house a soon as possible, but never jump into a real estate transaction if you don’t feel completely comfortable. By the time buyer’s remorse sets in, it could be too late to back out. The Carpenter / Kessel team provides all the available information to their clients so they can make an educated, informed decision.
With a chance that mortgage rates could rise nationally, buying now may also help you avoid paying more over the lifetime of your loan. Armed with local market knowledge from a Carpenter / Kessel team member, 2016 could be a great time to buy a new house.