The American dream of home ownership is what drives the spirit of this country. This dream has turned into skepticism due to the recent uncertainty of the housing market. We all know the market moves in cycles, and these five developments are the top reasons why potential buyers need to act now.
1. Home affordability has reached the highest level since recordkeeping began in 1970 says the National Association of Realtors. According to the most recent index, the average American family has double the amount of income needed to purchase a median priced home. Based on household income in Nashville, the average family could afford a mortgage up to $251,000. The median home price in Nashville is currently $168,500.
2. Prices have hit bottom and are starting to trend upwards in Nashville. According to the Greater Nashville Association of Realtors, March 2012 home sales volume was up 17% over March 2011, and the first quarter of 2012 was up 24% over the same period in 2011. These are encouraging trends that will likely continue as we move through the busy season for real estate in Nashville, spring and summer.
3. Interest rates will not go any lower. Rates are at their lowest point in fifty years and have started to trend upwards. The Federal Reserve has taken action to keep rates artificially low in order to boost the economy for a few years, and it is expected that they will start to raise rates again in the near future. Freddie Mac predicts that interest rates will be close to 6% at the end of 2012. Lower rates have a huge affect on your purchasing power. When mortgage rates rise 1%, the home price you can afford falls more than 10%.
4. It is still a Buyer’s Market. We currently have more than a nine month supply of housing in Nashville. With so much selection, you will find more properties that meet your criteria. You will also spend less time shopping for a home, competing with other buyers, and dealing with sellers who set unrealistic prices. Entry level homes are already feeling the crunch of buyer enthusiasm. I know of two entry-level listings in Greater Nashville that recently had more than ten offers at one time. Also, the level of distressed properties in Nashville is trending downwards.
5. Rental agents are experiencing rising occupancy rates and higher prices. A low supply of rental homes combined with an improving economy has made it difficult for families to find suitable housing. The average rent growth for large complexes (50 or more units) has grown ten percent this year. As long as relocation into Nashville remains strong, rents will continue to increase.
We all have heard the saying, “Buy Low and Sell High.” There may not be a better opportunity in your lifetime to “Buy Low” than now!