The past few months have been a bit of a rollercoaster ride. Nationwide business closures, layoffs, and unemployment have resulted in a volatile economy. Many would-be buyers and sellers have been left to wonder if it’s a bad time to make a move. Here’s why you actually might want to buy a home in the summer of 2020.
Buying a Home This Summer Is Actually a Good Idea
A period of economic uncertainty might not seem like a fantastic time to make a sizable financial investment, but actually, the real estate market has stayed quite stable over the last few months. Here’s why buying a home this summer might actually pay off in the long run.
Interest rates are shockingly low
One of the biggest reasons to invest right now is that interest rates are rock-bottom low. In fact, they’re lower now than they’ve been in the 50-year history of Freddie Mac and Fannie Mae. The previous record was in November of 2012, when they reached 3.31%. Now, they hover around 3% for a 30-year fixed-rate mortgage.
Just how much do interest rates matter? Let’s say you’re financing a $250,000 home for 30 years. At a 4% interest rate, you’ll spend $1,193 per month, or $14,316 per year on principal and interest. Take that same house and finance it at 3%, and you’re spending just $1,054 per month, or $12,648 per year. That’s $139 saved per month, $1,668 per year, and over $50,000 over 30 years!
Want to see the math for yourself? Try it out on our mortgage calculator.
Prices are stable, but expected to climb
Over the past few months, many buyers and sellers have pushed pause on their real estate plans. Though the market has remained fairly steady despite the overall economic slowdown, home prices have dropped a bit. However, as businesses reopen and the economy begins to pick up again, the real estate market is expected to recover very quickly.
As a buyer, this means now is actually the time to make a move. Buying when prices are lower means almost instant equity. Not only will you spend less (and pay less in interest), but your home value will quickly grow as the market swings back upward.
This is not 2008
Many fear that the 2020 housing market will follow in the footsteps of the 2008 housing crash. But it’s important to understand that this economic downturn and our current housing market are very different from those of twelve years ago.
The recession of 2008 was caused by an overinflated housing market. Banks and lenders allowed underqualified buyers to purchase overpriced homes, often with risky adjustable-rate loans. When home values fell and interest rates climbed, many homeowners found themselves with mortgages larger than the value of the homes they owned and sky-high monthly payments. This led to a soaring number of foreclosures and short sales.
Now, fast forward to today. Mortgages are much more difficult to qualify for, which means fewer buyers without the means to support their payments are able to take out loans. Additionally, homes values aren’t overinflated, as they were in 2008. And, because our current economic slowdown was directly caused by an unforeseeable and unpreventable health crisis, many lenders, banks, and government programs have offered assistance to those struggling with unemployment due to the pandemic.
The economy & the real estate market are expected to recover quickly
We’ll say it again: this is not 2008. As businesses reopen and people begin to return to work, the economy will begin to recover. Currently, demand for houses is high, which has kept the market strong and prices fairly steady. As long as buyers stay interested, sellers will continue to list their homes, and the market will continue to improve.
Thinking of Making a Move in Summer 2020?
If you’re thinking about buying a home in the Triangle area this summer, we’d love to help! Contact 220 Agents today with any questions about the current market; we’d be happy to clear up any concerns and help you find the perfect home in just the right spot.