Two Reasons That Now Is a Good Time to Buy

The housing market has had enough bad news to last everyone for years to come. But there is some good news that points to now being a great time to buy a house. Here are a couple of reasons why buying now may be a good move for you.

The first reason is that the ratio of housing prices to yearly rents is almost back to what it was before the housing bubble started. They aren’t quite there, yet, but they are headed in the right direction. On a national basis, the ratio of home prices to yearly rental is currently at 11.3 percent. That’s down from 18.5 at the height of the housing bubble.

What does that mean for potential homeowners? Without going into too much detail, the basic idea is that a lower price to rent ratio means that owning is a better deal than renting.

That’s not the only thing that’s going on. The second reason that now may be a good time to buy is has to do with mortgage rates. And this is the thing that many potential homeowners care about most because they have the biggest effect on the total cost of a home. Mortgage rates are low. Will they go lower? Maybe. Will they rise? Eventually. Even though mortgage rates do fluctuate regularly, the current rates are less than half of what they were in 1971. What that means is that the cost of money to buy your home is extremely low right now.

That makes buying a good deal because house payments are more affordable right now than they have been in years. You still need to be able to qualify for a loan. But in spite of what you may hear or read, loans are available for people who have good credit, employment, and the ability to make a down payment. Sure, there’s more scrutiny today (and more paperwork!). But loans are available.

We keep seeing signs of new life in the housing industry. Sales are creeping up. At some point—because inventories have been held so low—demand will outstrip the supply of existing houses. That means you’ll have to wait longer for a new home to be built. And that pent up demand will probably push prices up as well.

Is now the best time for you to be buying a new home? That’s a call only you can make. But there are indications that it’s a really good time to buy.