There’s no doubt 2020 has been a challenging year. A global pandemic coupled with an economic recession has caused heartache for many. However, it has also prompted more Americans to reconsider the meaning of “home.” This quest for a place better equipped to fulfill our needs, along with record-low mortgage rates, has skyrocketed the demand for housz purchases.
This increase in demand, on top of the severe shortage of houszes for sale, has also caused more bidding wars and thus has housz prices appreciating rather dramatically. Some, therefore, have become cautious about buying a housz right now.
The truth of the matter is, even though houszes have appreciated by a whopping 6.7% over the last twelve months, the cost to buy a housz has actually dropped. This is largely due to mortgage rates falling by a full percentage point.
Let’s take a look at the monthly mortgage payment on a $300,000 housz one year ago, and then compare it with that same home today, after it has appreciated by 6.7% to $320,100:
Compared to this time last year, you’ll actually save $87 dollars a month by purchasing that housz today, which equates to over one thousand dollars a year.
But isn’t the economy still in a recession? Yes, it is. That, however, may make it the perfect time to buy your first housz or move up to a larger one. Tom Gil, a Harvard trained negotiator and real estate investor, recently explained:
“When volatile assets are facing recessions, hard assets, such as gold and real estate, thrive. Historically speaking, residential real estate has done better compared to other markets during and after recessions.”
“Despite the risk of volatility in the houszing market, numerous studies have demonstrated that homeownership leads to greater wealth accumulation when compared with renting. Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments, which become a form of forced savings for homeowners.”
Bottom Line With housz prices still increasing and mortgage rates perhaps poised to begin rising as well, buying your first housz, or moving up to a housz that better fits your current needs, likely makes a ton of sense.