Why Buy A Home Now?

To answer my own question: interest rates are still historically low, and prices are increasing due to lower inventories of existing homes for sale, and lack of construction of new homes.   Interest rates today for a 30 year conventional home loan are quoted between 3.71% and 3.93%.  Interest rates for a 15 year conventional loan are as low as 2.98%.  Interest rates were around 6% when I was a boy.  I did not think I would ever see 6% again.  In the early 1980’s interest rates on home loans ran as high as 14 to 16% for a while.

As to prices increasing, the average price of the 39 homes sold in Haywood County, NC,  in February 2015 was $164,011.  In February 2016 there were 52 homes sold with an average price of $189,781.  That represents an increase in the average price sold of 15.7% in one year’s time.

If you are still thinking about renting, prices on rentals have increased considerably also, due to lack of inventory.  I saw a small brick home for rent last week for $1000 per month.  The home was just over 1000 square feet with 2 bedrooms and 2 baths on a small lot.  This home would probably sell in the neighborhood of $130,000.  If a buyer paid 10% down the principal and interest payment on a 30 year loan would be about $554.00.  Even with taxes and insurance escrow, the payment would only be $685.00.  As you can see, you can live in home you are purchasing for considerably less than you can rent that same home.  Also, your interest on a home loan may be deductible on your income tax, but rent is not deductible.

If you are a bargain hunter, the current interest rates, coupled with the current market , present a real opportunity.