Buying a home can be a tricky process – especially in today’s real estate market. If you are looking to buy a home in July, here are some important things you need to know.
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1. Mortgage rates are still near historic lows
We started 2021 with an average 30-year mortgage of well below 3%. You won’t find a fixed loan below 3% these days unless you can swing a 20 or 15 year mortgage.
But don’t make a mistake – today’s prices are still quite competitive. As of this writing, the average 30-year mortgage rate is only 3.148%. For every $ 100,000 you borrow, you pay only $ 429 in principal and interest on your loan. Well, that sum doesn’t include home charges like property taxes and insurance, so you need to include these in your budget as well. But from an interest point of view, there are savings to be reaped.
2. Home values have skyrocketed
In May, the median list price for a home was $ 380,000 nationally, according to data from Realtor.com. That is 15.2% more than in the previous year. Meanwhile, larger metropolitan areas recorded an average price increase of 7.4% compared to May 2020.
Of course, that number equates to $ 380,000 listing Prices. But many buyers today find that they have to pay more than the asking price for a home to get a quote. That’s because there are so many homes in the market today in Offer warswhere two or more buyers outbid each other in order to get a seller to cooperate.
3. Housing stock is still low
In May, the number of active real estate offers fell by almost 51% compared to the previous year, according to Realtor.com. By contrast, the total unsold home inventory, including pending sales, decreased by almost 21%. Newly listed apartments are 25.2% lower than the typical supply volume that the housing market recorded between 2017 and 2019.
Not only does having limited inventory make it harder to find a home that suits your tastes and budget. It also means that you will have to spread across the available homes with other buyers – hence the bidding wars mentioned above. Unfortunately, this can make buying a house more stressful and expensive.
It is also noteworthy that the real estate market did not experience its usual spring real estate boom this year. Some sellers might not list their homes until they are more secure with the economy and the pandemic. Therefore, more homes could hit the market in July, but we cannot say for sure if this will be the case.
Should you be planning to buy a home in July?
Today’s mortgage rates make it a good time to buy a home, but inflated home prices could wipe out those savings. Make sure you set a home purchase budget before you start your property search because the last thing you want to do is overstate it mortgage and regret it in retrospect.