Statistically, this year is shaping up to be the best year in real estate in the history of Colorado Springs. Condo, townhome and single family homes have sold like no other time. In fact, more homes were sold in the month of June than in any other month. So, why has it been so great and what could happen to shift the market in a downward direction? And what are some buyer considerations worth considering in the coming year?
Mortgage rates are close to all time lows now in 2016, but some economists predict they may be up around 5% by the end of 2017.
When mortgage rates go down, monthly payments go down and homes are more affordable. Pretty obvious. But lets look at a specific example. A $250,000 mortgage at 3.5% vs. the same mortgage at 4.5%. This is only a 1% difference, yet the monthly payment is $144 more at the higher interest rate. That’s significant. This could be the difference in a persons ability to buy a house. More folks in the housing market tend to drive up demand which also reduces supply. From Econ 101 we know this situation will tend to drive up prices.
As a Buyer your aim should be to purchase an affordable home.
So, what does “affordable mean.” It depends on your priorities. Generally speaking, financial advisors recommend keeping your monthly payment somewhere in the neighborhood of 25% of your gross monthly income. Lenders may authorize a loan that keeps you no more than 43% for your total monthly debt servicing (includes car, credit card, student loan, etc.). The monthly payment amount is one of the most important buyer considerations.
The average home size of has been increasing while lot sizes are getting smaller.
What’s more important, a big yard or a big house. I know of many folks, especially in their twilight years that have had enough of yard work. So, they’re opting for smaller, maintenance free properties. Some are even downsizing their inside space as well. Less stuff, less clutter.
Others appreciate the outdoor space more and enjoy working outside and creating that perfect yard. And they may also be young families that need space to grow.
There are a ton of great home finder applications these days. From Zillow, to Realtor.com, the public has more access to online listing information than they ever had before. Of course, in my opinion, the KW app is the best for searching anywhere in the U.S for active home listings. The app you decide to use is probably one of the less critical buyer considerations…but still, the KW app is pretty cool. Check it out here (open in mobile):
When Are You Buying?
The season you’re looking to buy can be important as well. Spring is usually the busiest season for real estate and typically a very good time to consider selling. Buyers may face tough competition during this time and have a challenging time placing the winning offer. But not every seller has the option of selling during the “best” time so buyers can usually find homes even during slower months. The advantage of looking in fall and winter is that you have less competition as the majority of buyers out there are looking to get into a place before school starts. So, time of year is another of the many buyer considerations
So, these are just a few buyer considerations to think about when you are embarking on your home purchase journey. Most importantly is to hire a good Realtor to help you navigate the myriad of tasks … from home search to offers to closings … your Realtor will help you through it.
About the author: The above article “Buyer Considerations” was provided by Kevin Guerrero of Keller Williams Clients’ Choice Realty. To find out more about Kevin and Keller Williams check out the ABOUT US page.
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