There are many benefits of owning a home. Due to negative press about the real estate market, buyers are skeptical of purchasing with the uncertainty surrounding the housing market. Here are 12 reasons to buy a home in 2012.
1. Rents are at an All Time High- Due to the influx of foreclosures and fewer people making a decision to buy a home, the demand for rentals the past few years has increased. All prices are based on supply and demand and that is pushing up rental prices.
2. The Worst is Over-From the market peak in 2006, the S&P/Case-Shiller index of 20 housing markets is down 32 percent. What does that mean? The housing market could be at a turning point. Signs are showing we are moving from steeply falling home prices to an extended period of stabilizing prices. You can't predict the market and you won't know when low prices are over until they start to go up. Stability is your first clue.
3. Historically Low Mortgage Rates-Long-term mortgage rates fell to new lows in January. According to FreddieMac, a 30-year fixed-rate mortgage averaged 3.89 percent in the week ending Jan. 12, falling from 3.91 percent last week and marking the lowest since Freddie Mac began keeping track. A 15-year fix fell to a record low 3.16 percent.
4. Mortgage Rates Won't Stay Low-Just like you can't predict when housing prices will rise; you also cannot predict the mortgage market. It is however unlikely that mortgage rates will remain low for long. This is especially true if demand starts rising and prices stabilize.
5. Less competition-The slow sales pace is proof that there are fewer buyers out there. That is good news for a serious buyer; they will be less likely to end up in a bidding war. It doesn't mean that homes that are priced aggressively to sell will not end up with lots of offers. Wait too long to jump in the buyer pool and there may be more competition. The market is showing signals of recovery, meaning demand will pick up. Being a little ahead of the curve gives buyers more elbow room.
6. Appreciation-Odds are that buying a home at the current rates can almost ensure your home's appreciation in the future. With the double advantage of low prices and low mortgage rates the perfect storm for home appreciation is brewing.
7. Build Equity-Your home can actually work as a wealth building or even savings plan for you. Some homeowners are now adding money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This is called equity building. Because home equity is the largest single source of household wealth for most Americans it is a smart move to ensure financial stability.
8. Tax Deductions-If you are looking to save more money on your taxes than buying might just be the answer. Real estate property taxes for a vacation home and first home are fully deductible. The IRS Publication 530 provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
9. Homes are More Affordable- According to Kiplinger, the percent of family income consumed by a mortgage payment is at record lows. The average family pays only 12% of their monthly income to pay for today's mortgage. Affordability has not been that low since 1971. Additionally, the Fed's financial obligation ratio for mortgage holders have fallen to levels not seen since 2003.
10. Moving Up is More Affordable-If you are thinking about buying a bigger or more expensive home this is a great opportunity to save money. Homes in a lower prices range have not lost as much as higher-end homes. For example, if your home in 2006 was worth $125,000 it may now be worth $100,000. The home you may be looking to buy in 2006 was priced at $350,000 but now is under $300,000. You have made a gain of $25,000 in your upward move.
11. Buy Low, Sell High-The uncertainty surrounding the housing market will wane. When the housing market rebounds prices will go up. Owning a home may eventually be more than just a pride issue, it could also become a profit through a home sale.
12. Pride of Ownership-There are more benefits than just financial gain in homeownership. Some of those benefits may be painting the walls the color of your choice, or landscaping the yard, or having a pet. No matter the reason; homeownership will give you pride.