If you’re like many potential home buyers then you’re probably wondering whether now is the right time to buy a new home or whether you should wait. Real estate agents at MSWoods Indianapolis Real Estate report that this is a very common question these days among their clients. While it is impossible to know the future, it is possible to look at the facts and use this information to make an informed decision.
Ted C. Jones, Ph.D., Chief Economist of Stewart Title, points out that the affordability of homes, both in terms of price and payment, has improved significantly since 2006. Says Jones, “The real key is what your monthly payment has done, the combination of the price and the rate. First-time home buyers in 2006, their median home payment was $1,110 and today it’s $777. That’s a 30-percent decline.”
Indeed, the combination of lower purchase prices and lower rates has also had a beneficial effect. According to Jones, in 2006 first-time home buyers needed $53,300 of income to qualify for a home loan whereas today they need only $37,300—a drop of approximately 30 percent. This makes sense considering that interest rates have gone from the mid-sixes to the low fives from 2006 to present.
Jones also goes on to state, “If you’re a re-purchase seller then the only thing that’s really changed is the median price has gone, on average, from $221,900 to $177,900.”
The slowed economy has created nearly unprecedented opportunities for home buyers as lower prices have resulted in a reciprocal increase in value. Realtors at MSWoods are confident that prices are close to bottom and that now is definitely the time to buy if ever there were a time. With so many Indianapolis homes for sale there is a remarkable inventory from which to choose; even more so when surrounding cities like Fishers, Carmel, Greenwood and Zionsville are included.
For the moment, put aside the probability of higher prices in the near future. An even bigger risk in waiting – indeed the biggest risk — is that mortgage rates won’t stay at these historic lows forever. Consider that the difference between a 5.5% rate and a 6.5% rate on a $100,000 mortgage loan is roughly $23,000 over the 30-year life of the loan. Now assume a modest 10-percent jump in home prices. Using our 6.5% rate, that $23,000 cost now swells to a hefty $46,000.
So if you’re looking to buy Indianapolis real estate you should consider acting sooner rather than later because prices likely won’t stay low forever. With spring knocking on winter’s door and summer on the not-too-distant horizon you can pretty much count on the Indianapolis real estate market heating up.