To buy or not to buy? Purchasing a home is a big and often nerve-wracking decision. If you’ve been considering making the move from renting to owning, then listen up: 2016 is shaping up to be a great year to buy a home.
These are four reasons why renters may want to take the plunge and purchase a home next year, according to CNN Money:
- Climbing rents: The price to rent is expected to rise next year, so buying is becoming a cheaper option than renting in many cities, CNN Money reports. Property managers expect rental rates to rise by 8 percent on average next year, according to a rental market survey by Rent.com. Check out “Get Ready for a Major Rent Hike.”
- Home prices are expected to level off: Zillow chief economist Svenja Gudell told CNN Money that home prices are expected to make more moderate gains of about 3.5 percent in 2016. In comparison, housing prices increased by 8 percent in 2012, 11 percent in 2013 and 5 percent last year, according to the Home Buying Institute. That should open up the real estate market to many prospective homebuyers who have been waiting for home prices to slow their ascent. Still Zillow expects home values to outpace wage growth, which could make it difficult for lower-income Americans to purchase a home.
- Last chance for record-low interest rates: Historically low interest rates can’t last forever. The Federal Reserve is expected to start bumping up interest rates soon, so the earlier you lock in a low rate, the better. “You are likely to get the best rate you will possibly see, perhaps in your lifetimes through the majority of next year, but certainly, the earlier the better,” Realtor.com chief economist Jonathan Smoke told CNN Money. For tips on how to score a smoking deal on a home mortgage, check out “Getting a Mortgage That Saves You Thousands.”
- More home listings: As prices plateau (and before they possibly decline) more homeowners are expected to put their homes up for sale in 2016, Smoke said. Homebuilders are also planning to focus on middle-range and starter homes next year, which will provide a much-needed boost to housing inventory.
According to the Home Buying Institute, the bottom line for buying a home in 2016 is this: “If you plan to stay put for a while, and you feel pretty good about your employment and income situation, 2016 might be a great time to buy a home.”