Market Trends Demonstrate Buying Now is Smart

The latest statistics of the Orlando real estate market reveal a very stark trend, demonstrating now is the time to buy. Across the local region, home prices are on the rise, even though inventory levels are relatively high. Summer time sales of existing properties increased an astounding 33 percent in July despite median home prices rising 59.2 percent over the last four years. Last July, the median home price stood at $170,950, now, it’s $183,875.

What’s more, near-historic interest rates are set to rise in the future, although home loan applicants still enjoy loosened credit standards and plenty of property type choice. Clearly showing this phenomenon is an increase of 33.73 percent in single family home sales from one year ago in single family properties, while condos increased 20.26 percent. New construction is all around the area, as are recently built properties, both of which offer superior energy efficiency and provide the latest in building code standards.

Market Trends Demonstrate Buying Now is Smart

Amidst this backdrop are pending transaction, which decreased 7.51 percent from July 2014. As the nearby quote points-out, the affordability index is putting more pressure on buyers to enter the market as it continues to rise. The latest statistics include the fact that first time home buyer affordability decreased in July by 119.65 percent. All of these statistics show that timing is a key factor in buying a home, and, that time is now.

The July affordability index is 168.26 percent, a decrease from June’s index of 169.63. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) —Orlando Regional Realtor Association

Buying new or bigger has several advantages. In addition, it allows individuals and families to tap into a great return on investment as equity increases. For those who are considering buying in the Greater Orlando Metro Area, which includes Lake, Orange, Osceola, and Seminole counties, there are many choices to be made. Here are four motivating reasons why now is the time to buy a home:

  1. Interest rates are going to rise. The fact of the matter is, interest rates fluctuate day-to-day. In general, on an upward trajectory. The Federal Reserve continues to signal to the financial markets, businesses, and consumers, rates will steadily increase. With that comes less purchasing power and dollar devaluation.
  2. Mortgage insurance premiums are less expensive right now. In the beginning of the year, the Federal Housing Administration acted to reduce annual mortgage insurance premiums by 50 basis points. This caused rates to drop to just 0.85 percent from 1.35 percent, a significant amount of savings over many years for homeowners.
  3. Owning is cheaper than renting. Only short term situations make renting a more reasonable option than buying. Buying means building equity and in a market like Orlando, that’s certainly the case. Industry studies show that the average homeowner spends just 15 percent of monthly income on a mortgage whereas a renter spends double that amount — 30 percent. In addition, rent increases from year-to-year.
  4. Mortgage approval is easier. The national economic downturn hit the financial sector hard. Banks lost hundreds of millions of dollars in defaulted home loans, credit cards, auto loans, small business loans, private student loans, and other debt instruments. Because of such large losses, lenders are willing to accept more risk to rebuild books of business. In addition, credit score modeling by FICO changed, reducing the impact of medical debt liabilities.

All of these combined factors certainly show that buying now is smart because market conditions will surely change in the near future.