Despite a wobbly economy, an ominous fiscal cliff and a Frankenstorm named Sandy, 2012 ended on a high note for the American housing market. Dwindling inventory, rock-bottom mortgage rates and improving job numbers fueled the recovery process.
Home prices rose, housing starts jumped and inventory dwindled. According to Trulia, the California-based online home sales and rental service provider, the market was 51 percent back to normal in November, compared with 28 percent a year earlier.
The momentum is continuing in 2013, despite a few challenges. So, if you are still on the fence about living the American Dream of homeownership, now may be the time to take a plunge. Here are 13 reasons to buy a home in 2013.
1. Low mortgage rates: Last year saw historically low mortgage rates. But as the economy and the housing market gathers steam, these rates will go up, says Walter Molony, spokesman for the National Association of Realtors.
In the week ending Jan. 9, 2013, the average 30-year fixed rate climbed to 3.67 percent from 3.58 percent the prior week, according to Bankrate- .com . Rates on 15-year fixed loans rose to 2.92 percent from 2.88 percent. Despite the slight increase, rates are still affordable, so lock into them before the low rates become history.
2. Affordable prices: Remember the glory days of the housing boom? Prices skyrocketed, forcing many to rent. The economic recession brought down those inflated price tags.
Foreclosures flooded the market in many communities, dragging prices to record lows. But with the economy improving, prices again are climbing. Nationally, home prices made a 4.9-percent gain year over year. Clear Capital’s Home Data Index expects prices to grow 2.1 percent in 2013. Buy before prices shoot up again.
3. Building equity: Home prices are improving, which means as a homeowner you are adding equity as time goes on. Plus, that check to your lender each month adds to your monetary value — completely different from paying rent to a landlord.
4. Planting roots: Owning a home helps you be part of a community. You establish long-term relationships with neighbors and participate in community building.
“It establishes a feeling of belonging and stability,” said Evelyn Johnston, broker/owner of Elkhart County Subdivisions, Granger, Ind.
5. Dwindling inventory: If you see your dream home, stop dilly-dallying and make the offer.
“The market is changing,” Johnston said. “Sellers get multiple offers now, and they are selling close to or at full asking price.”
6. Impressive new homes: In the past few years, there has been significant research on building materials.
“There’s been an explosion of new materials,” said Stephen Melman, director of economic services for the National Association of Home Builders. “There are many options and good-quality materials available now for roofs, floors and exteriors.”
The newer homes are energy efficient and boast better insulation and acoustics.
7. Expensive rent: Apartment vacancies dropped and rents rose again in the last three months of 2012. Nationally, apartment vacancy rate declined 4.5 percent, and rents were up 0.6 percent from the previous quarter, according to data from real estate firm Reis Inc.
“Rents are rising at a faster pace, and you have renters now moving toward home ownership,” Molony of National Association of Realtors said.
8. Retirement investment: Homes don’t just offer that fuzzy feeling of ownership, they are also your biggest financial investment. The sooner you buy, the sooner you can stop spending cash on rent, start building equity and grow your savings. When you eventually sell your home, it’ll be cash in the pocket.
“The key is not to sell when the economy is down,” Johnston said.
9. Freedom of space and living: An explosion of home improvement and décor TV shows has made everyone an aspiring contractor or interior decorator. Becoming a homeowner can allow you to unleash your inner artist or carpenter. If you want to tear down a wall, paint your bedroom walls canary yellow or install a Jacuzzi in your bathroom, there’s no one stopping you.
10. Taxes: Like having that extra money from tax returns? One incentive to buy is for the tax deductions available to homeowners. Buying a home would allow you to deduct everything from real estate taxes to private mortgage insurance, ensuring a nice sum back from the IRS. So why wait another year?
11. Building your credit score: Mortgage payments are a big deal. If you own a home and are regular on payments, you are adding to that ever-important credit score. A good credit score helps you get a sweet deal on a new car loan, and even allows you to get low-interest credit cards.
12. Pay the same bill: Landlords can raise rent, but once you lock into a long-term mortgage rate, your monthly bill remains the same. A home protects you against rental inflation.
13. Live the dream: The American Dream is synonymous with owning a home. The economic downturn, free flow of home prices and home equity turned that dream into a delusion and nightmare for many. Improving employment numbers and foreclosure numbers are again restoring faith in the dream, and it is your chance to live it.