Yes, you should buy a house right now – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Advisor News
Newswires RSS Get our newsletter
Order Prints
September 12, 2022 Newswires No comments
Share
Share
Tweet
Email

Yes, you should buy a house right now

Jackson Progress-Argus (GA)
Mortgage rates and home prices are high. You should still buy a house right now.

You can't time the housing market.

That statement, on the surface, seems like it's wrong, but over 50 years of sales data suggest broadly that the right time to buy a house is always now. Housing prices, of course, vary by market, but on a national level, they have climbed steadily since the 1960s, according to data from the St. Louis branch of the Federal Reserve.

Related stories

  • For some, nothing to fear from taking RMDs, professor says
  • Half of investors plan to work after retirement

Mortgage rates, which have basically doubled from 2.9% a year ago to 5.89% as of Sept. 8, are a factor, but waiting for rates to drop is a dangerous game. If mortgage rates do fall, more people are likely to end up back in the housing market. That will push prices higher.

Housing is in most cases, not an optional purchase. Unless you have someone willing to give you a place to live free of charge, your choice is renting or buying a home, and as housing prices climb rental rates generally move in the same direction.

"Median rent in the top 50 metropolitan markets hit a record $1,849 in May, up 15.5% from a year earlier, according to Realtor.com, a real estate services firm. It was the 15th straight month of record rent," TheStreet's Dan Weil wrote in July.

Put simply, if you need a place to live, and expect to stay put for at least a few years, buying makes more sense than renting.

TheStreet

Housing Prices Go Up

As you can see on the chart above, housing prices move steadily higher. Yes, there are periods where they dip and individual markets may vary but the right time to buy a house has historically generally always been "now."

Mortgage rates are a factor, but they are also relative. The current rate hike has slowed, if not stopped, rising prices in many markets. If we see lower rates, even a few years from now, that would be a catalyst for prices to rise again.

It's important to understand the impact of mortgage interest rates on your potential payment. If you borrow $300,000, here's what you would pay per month at a variety of interest rates

3%: $1,2654%: $1,4325%: $1,6106%: $1,7007%: $1,996

That's a $435 per month difference between where rates were a year ago and where they are now (more or less). The added cost certainly factors into how much you can spend on a house, but it generally does not mean you should not buy a house.

A Personal Look at Buying a House

During the pandemic, my wife and I sold our downtown condo, used the proceeds to buy a resort condo/rental property, and moved into a rental. When we moved to the rental -- a move forced by needing to stay on my son's bus route for his last year-and-a-half of high school -- we were paying $2,495 a month for a 2,600 s.f. 4-bedroom townhouse in a community with a nice pool and a gym.

That number was around what our costs were in the condo we owned previously, but we weren't building equity or gaining any appreciation. In year two, our rent went up to $2,700 a month and that's when we began looking for a home.

Ultimately, we decided we could not afford what we wanted (a 3-bedroom, single-family home) in the South Florida area where we lived, so we began looking about 40 minutes north. Ultimately, we found a home in a nice community with similar amenities to what we were leaving and bought a 3-bedroom, 1,600 s.f. single-family home for $315,000, putting 20% down.

And while we downsized a bit, we had never needed as much space as we had in the rental, so having a yard, a garage, and a nice screened-in lanai seemed like a fair trade-off. We got in before interest rates spiked our mortgage is at roughly 4% making our monthly payments, which includes about $400 in homeowners association fees as well as our insurance and tax escrows about $2,1,00 a month.

That's $600 a month less than we were paying to not own a home (and $1,900 a month less than what our previous landlord got from the next tenants). If we had waited a few months and paid 6% interest our payment would have gone up $330 per month (and our cost to buy would have been higher as prices keep climbing).

So, now, instead of renting where costs would almost certainly rise on a year-to-year basis we're building equity in a property in a community where prices are likely to climb. We, of course, face added costs like repairs and improvements (we redid the entire house), but we own our home and that gives us an asset that should build our wealth over time.

Older

Former Indiana police officer faces Dec. 14 sentencing for fraud

Newer

Maryland woman sentenced to prison for fraud, tax evasion

Advisor News

  • For some, nothing to fear from taking RMDs, professor says
  • Half of investors plan to work after retirement
  • Cetera to acquire Securian’s retail wealth business
  • Study: Education level should drive decisions on Social Security, annuities
  • Former California energy company exec given 5 years in prison for $15M investment fraud
More Advisor News

Annuity News

  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
  • Producers stew as insurers slow to process life and annuity applications
  • Substitute teacher wins massive lottery drawing in North Carolina. ‘Too good to be true’
  • Brad Rhodes: An annuity product many have never heard of
More Annuity News

Health/Employee Benefits News

  • Nearly half of all gig workers have no access to health insurance
  • California offers health insurance for $10 a month. The deadline is days away
  • Amazon announces service to deliver medications to your door. Here’s how it works
  • COVID-19Another COVID ‘new normal’: more Californians dying at home
  • Seven sentenced in conspiracy to defraud federal health insurance programs
More Health/Employee Benefits News

Life Insurance News

  • Cetera to acquire Securian’s retail wealth business
  • What does Curtis 'Cousin Eddie' Smith know in Murdaugh case?
  • Alex Murdaugh's murder trial starts with cellphones, bullets
  • Prosecutors, defense argue guns, bad acts in Murdaugh trial
  • Lincoln Financial Group offers new, fully automated life product, WealthAccelerate
Sponsor
More Life Insurance News
The time is 08:44:31pm test

- Presented By -

Top Read Stories

  • A Louisiana employer's health perks helped their workers lose weight. Here’s how.
  • US debt ceiling limit reached; Social Security, Medicare targeted
  • Former CEO of Texas beverage company sentenced to 10 years in prison for fraud
  • LETTER: FEMA flood insurance is all but worthless
  • Progressive online practices set example for agents, other carriers
More Top Read Stories >

FEATURED OFFERS

Grow life insurance sales in 2023 with middle-market clients

Tap a new source for sales and referrals with Allianz Life Insurance Company of North America.

Don't Miss ICMG 2023

When the success of your business depends on making the right connections, ICMG is the place to be.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.