Should You Buy A Home Now Or Wait to 2014 In Charlotte,NC?

This is a question that many home buyers on the fence have been asking all year. When is the right time to buy a house? Should I wait and see if prices come down and interest rates go back down or buy now since they may go up even more? The other day I read an article depicting this on a national scale. I thought the reasons were pretty good and I wanted to see how it affected the Charlotte, NC. area in regards to her reasons. They state four reasons to purchase now versus waiting to after the new year to buy a house: First is that interest rates will continue to rise. We have seen historically low interest rates that if you had asked anyone in the mortgage business a few years ago they would have said you were crazy if the thought of rates being in the 3% range was coming. Well it did. However; that interest rate is somewhat clouded by the fact the Federal Government stepped in and bought up mortgage securities at a very low rate to help stimulate the economy and get more homes sold and more home buyers into a home that would not otherwise get because rates were too high. That is coming to an end. It was announced earlier this year that they were backing away from it and letting the investors have them back. Well an investor wants a better return on their money than a bank does. Therefore; rates need to rise in accordance with the demand from investors buying the mortgage backed securities. As we have begun to witness that recently with a spike in interest rates. The government stepped back in a little more to keep the climb from getting (as they called it) out of control. The thinking is that in 2014 the government will step completely out of the picture and rates will go up to around 5% to 6%. Still not bad but substantially higher than what we are used to and will hinder the buying power of the consumer in terms of price point. Second, Home prices are on the rise across the country. Well in the Charlotte area if you read my monthly trends report you will definitely notice a swing where the prices of homes have steadily increased this year. It is simple economics of supply and demand. The supply has been dwindling faster than the demand for houses thus causing prices to go up. I have noticed in some areas of Charlotte we are starting to see home prices reach a point of the pre-recession price points. Though this is still rare it is becoming more and more common as the year goes on and will likely trend this way into next year as well. To put this in perspective for you. Let's say a $200,000 house a year ago increased in price 10% over the year. At the same time the interest rate went from 3.5% to 4.5% (which it is hovering at right now). That change in price (which is what Charlotte, NC. has seen in a lot of areas) coupled with the current rise in interest rates just reduced your buying power by a whopping 20% if you were basing it strictly on monthly payments. A $300.00 increase in monthly payment is a dramatic increase in payments for anyone. And that is what you would be looking at. Third, Homes are still affordable. Well I agree to this at a point I am not 100% buying into the premise. I think homes are always affordable to the right set of buyers depending on needs. I think that with rates low and prices just starting to climb that the options of houses you have available is higher now than it will be six months based on the current trends The example above on the second reason shows how you may have to settle for less house than you wanted by waiting to buy a house...So while I believe home affordability is always preset the size and location of the home will change based on prices and interest rates. Last, protect you from inflation. This has always been an argument I have attested to. If I could lock in gas prices for 30 years five or six years ago I would be paying almost $1 a gallon cheaper. The same goes for bread, milk, eggs, and anything we buy. We all have heard our parents or grandparents talk about the days when a loaf of bread cost 25 cents and you could buy candy for pennies. Well if you look at your mortgage the same way then you are getting a good deal. The one nice thing about a mortgage payment is that if you get a fixed rate (the only one I recommend) then you will know what your principal and interest payment will be for the next 30 years. Yes, insurance and property taxes will fluctuate but generally insurance does not change dramatically. A couple of dollars a month one way or the other and property taxes in Charlotte area are adjusted every eight to ten years. So you have a good idea of what you are paying for at least 8 years. I know my parents had a mortgage payment of $350.00 a month and thirty years later my dad said he as paying more in a car payment than he was in house payment....A nice feeling knowing your rent is not going to change every year and possibly go up to a point you have to move.... So, is now a good time to buy or should you wait? In the past the consensus was wait and maybe buy because we know the time was coming where the bottom would hit and prices and rates would go up. Well that time has come and based on the past six months it does not look like it is going to go back down anytime soon...So, if you can and want to now be a great time to buy a home in the Charlotte, NC area. Dave diCecco Realtor/Broker Helen Adams Realty Cell: 704-519-7895 ddicecco@helenadamsrealty.com www.davedicecco.com