If you have been watching the real estate market and think that the price of homes is steadily increasing, you are correct. The median price of an existing home in the U.S. rose to a record $252,800 in May.
This means that sellers can expect more return on their investment and buyers should get moving now, because continued increases are expected over the next few months, and even years.
Experts are forecasting that real estate prices will grow over the next several years at a 1 percent to 4 percent annual rate, due to the employment rate, low mortgage rates and tight inventories of available homes for sale.
One recent survey completed by the independent research firm Pulsenomics, found that home prices may experience an increase of about 3.5% per year for the next five years – equating to a growth of around 18% by 2021. The question is, as a seller or a buyer, how will this affect your bottom line?
Selling now = more home equity
What do rising prices mean to sellers? An increase in home values will have a positive effect on your home equity. With that extra equity, you can probably afford to sell and trade up for the larger home (you know, that one with the amazing kitchen) that you have been dreaming of for the last several years.
You can get a better idea of exactly where you stand by researching your home’s value and setting up an appointment with your real estate agent for a Comparative Market Analysis (CMA). This will compare your home to similar properties that have recently sold in your area and tell you your home’s current market value – what you could expect to get for the home if you sold it today.
Buying now before prices rise more
Buying a home is an investment. If you buy now, there is an excellent chance it will be worth much more in a few years. Also, it is less costly to buy now rather than later when prices have risen further, and it will bring you more in equity – a return on your investment.
Remember that interest rates are still at historic lows, but they are expected to continue to rise over the coming year – perhaps several times. At the start of the year, the Federal Reserve raised interest rates from the funds target rate of 0.5 percent to 0.75 percent. Reserve officials said there was a plan to issue more rate hikes in 2017.
Your first step is getting pre-qualified for a mortgage so that you can begin searching for the right home now, before prices rise further or interest rates make that anticipated jump. Next, talk to a real estate agent who understands the real estate market in your area, will work with you to make the buying process smooth, and get you into a home that you love.