Why 2012 is a great time to buy a home in Hampton Roads
5 Reasons that 2012 is the year to buy a home
1). Prices are low! The market is starting to see an increase in home prices. This is an indicator that the low home prices we are seeing may not be around for much longer. If you are interested in being a home owner, then now is the time to do it. Remember what you learned in Economics 101…. “Buy low and sell high”. Now is the time to buy low!
2) There aren’t as many foreclosures out there. What does this mean to a home owner? Part of the reason for the downward pressure on home prices was the flood of bank owned foreclosures on the market. Banks are in the business of lending money not owning homes. When a home owner walks away from a home and the bank is then left with a vacant home, they are incentivized to get that home off of their books by any means necessary. This often means the slashing the sales price by up to 20% to get the house sold. Many of these foreclosures are in disrepair which helps to justify the decreased price but too many of these blighted homes in a neighborhood and it starts to bring down the home values of all the neighbors. With the decreasing number of bank owned homes on the market, more and more homes are being lived in and maintained by home owners, which is good for maintaining home values.
3) Record Low Interest Rates. I remember as a child my mother crying as she signed the mortgage paperwork for a new home with a 15% interest rate. My how times have changed. To give you some perspective. If you were to buy a $300,000 home at 1981 interest rates of 15%, your monthly payment would be $3,800 a month for a 30 year fixed rate mortgage. Take that same house at today’s record low interest rates of 4% and that payment is $1,400 a month. That is a 63% difference between the two!!!! This is never going to get any better than it is right now.
4) Owning is now more affordable than renting. 3 bedroom apartments at the newer apartment complexes that are popping up are renting for around $2,000 a month. For $2,000 a month you can buy a $350,000 house (this includes taxes and insurance). Homeownership has never been more affordable than it is right now.
5) Interest Deduction. The government incentivizes home ownership by providing interest payment tax deductions. For example, if you pay $10,000 in interest payments to your mortgage lender in a year, you will be able to deduct that cost which will save you approximately 3,000 in taxes. When you rent, you can’t deduct your rent. Imagine what you could do with $3,000 extra dollars!