Why It’s Still A Great Time To Buy A Home In Nashville!
There is no question that the real estate bottom in Middle Tennessee has passed. Low inventory and climbing prices have created a seller’s market in most areas across TN and Nashville realtors are reporting “bidding wars” in the hottest markets. But just because it is a seller’s market it clearly does not mean it isn’t a good time to buy. Although the market conditions might pose as a risk for “home flippers” who want to buy and sell to turn a quick profit, for buyers who want to buy a home to live in over the next 5 to 10 years, here are some reasons why you should get the ball rolling and buy a house in Nashville today!
Home Prices Are Still Rising – The substantial gains seen over the past several months can fog the memory of the fact that housing bottomed out only about a year and a half ago, hitting its lowest level in March 2012. While recent price increases aren’t sustainable, there is still plenty of room for home values to climb. The primary driver of price gains is an inhibited supply, modest homebuilder activity, dwindling foreclosures, and potential sellers who are waiting for prices to increase even further. Total housing inventory across the U.S. at the end of May rose 3.3% to 2.22 million homes for sale. According to the National Association of Realtors, listed inventory is still 10.1 percent below a year ago.
Mortgage Rates Are At A Historic Low – Mortgage rates, currently at about 4.6% may have climbed a full percentage point since May but they are still lower than they were just 2 years ago and far lower than their long-term average of about 8%. Economists don’t predict the recent surge to continue. The Mortgage Bankers Association anticipate rates will remain close to current levels through the end of 2014.
It’s Easier To Obtain A Mortgage – Lending conditions were considerably constricted during the credit crunch and lenders have been hesitant to open their doors to borrowers who have less than a strong credit score. However, there are signs that lenders are starting to loosen the clamp. The Mortgage Bankers Association’s Mortgage Credit Availability Index showed that credit availability slightly increased every month since April. According to a report from Ellie Mae, since the beginning of 2013, banks have eased up on the requirements on down payments, debt-to-income ratios, and credit scores. Banks may also be even more willing to work with homebuyers over the next year as rising rates mean fewer applications for refinancers, which have dominated the lending business over the past few years.
Buying Is Still Cheaper Than Renting – According to an analysis by Trulia.com, even with the recent increase in home prices and mortgage rates, it’s still cheaper to buy than to rent. Assuming the buyer stays in the home for at least 7 years, nationally, it is 37% cheaper to buy than to rent. Rates would have to more than double to over 10% for renting to be more beneficial. According to RealPage, typical monthly rent in the 100 largest metropolitan areas is $1,100 and it is not anticipated that it will get any cheaper. The National Association of Realtors projects rental rates to increase by 4.5% this year and next year.
Less Competion With Investors – In recent years the real estate market has seen an influx of investors who are able to snatch up properties at deep discounts via all cash deals. This has made it difficult for retail buyers to compete. Recent price increases have made such buys less appealing. There are less distressed sales available which were attractive purchases for investors due to the diminishing number of foreclosures. According to CoreLogic, there were 1 million homes in some stage of foreclosure back in May which is a 29% decline from the previous year.
Reference: National Association of Realtors; Trulia.com; MBA; Ellie Mae
I you or someone you know is interested in buying or selling
a Nashville Home please contact:
The Lipman Group | Sotheby’s International Realty
Office: (615) 463-3333 / Cell: (615) 509-1753