Friday, July 17, 2015
By Admin


This summer seems to be providing a continual stream of good news in the homes market.

Following the very positive Albuquerque area news we posted on Tuesday, it has since been widely reported that the national foreclosure rate in May was the lowest since December 2007 - a significant date that marked the very beginning of The Great Recession. This is symbolic of the remarkable turnaround that has taken place in recent times.

As our recent "half term report" article on the housing market demonstrated, we're also on track for the best year in real estate since 2006. We also recently looked at the reasons behind the return of the first time buyer after many lean years of entry level purchasing.

A stronger economy, better job prospects and security, still extremely affordable mortgages and other incentives such as low down payment home loans for qualifying buyers are all great reasons why anyone who has been contemplating home ownership should quickly join the growing ranks of first time purchasers.

Here in New Mexico, home prices remain very sensible and affordable. An excellent measure of that is a recently published statistic that demonstrates, on average, prices are currently 19.1% lower in the State than at the peak of the 2005-7 boom period.  

It really isn't an exaggeration to suggest that right now is arguably one of the best times to buy in living memory. The question is, however, how long this near perfect set of circumstances can continue to hold together?

Much will, of course, depend on what happens to mortgage rates in the coming months. They have, in fact, been kept low because of international uncertainties and might otherwise be moving towards 5% for a 30 year home loan, instead of constantly hovering slightly above or below 4%.

Some expert predictions suggest that rates will be nearer 5% in a year's time. It should be remembered, however, that these forecasts have been in place for most of the past couple of years and have yet to be realized. The simple truth is that, with such a volatile world situation both economically and politically, there are so many unpredictable dynamics that factor into the rate you're quoted (please click here for a more detailed explanation of how mortgage rates are set). The only certainty, in fact, is that the future for rates is uncertain, so playing a waiting game could be costly.

To illustrate how costly delaying your purchase for, say, a year could be, we recently read an example suggesting that, assuming mortgage rates do rise to 5% and house prices rise on average by an expected 5%, a $250,000 mortgage could cost over $78,000 more over its 30 year lifespan. A sobering statistic and one that on the fence buyers should seriously consider, not least as the extra $216 that same mortgage would cost per month might be the difference between home ownership and staying in the rental sector.

And talking of renting, although we have to preface any future gazing with the caveat that nothing is definite, it's pretty inconceivable that rents will not continue to rise, as they have continued to do year after year after year. Buying now means you lock in a low rate for the life of the home loan and, even better, you'll be paying the same amount every month and never have to worry again about your landlord moving the goal posts.

We strongly believe there are extremely compelling reasons why, if at all possible, you should accelerate your home ownership aspirations and give very careful consideration to the possible dangers of delaying the decision. Call us today for the very best advice, tailored to your individual circumstances.

 

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