Is Buying a Home Today a Good Financial Move?

Dated: December 8 2020

Views: 84

Is Buying a Home Today a Good Financial Move?

Is Buying a Home Today a Good Financial Move? | MyKCM

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 home purchases.

This increase in demand, on top of the severe shortage of homes for sale, has also caused more bidding wars and thus has home prices appreciating rather dramatically. Some, therefore, have become cautious about buying a home right now.

The truth of the matter is, even though homes have appreciated by a whopping 6.7% over the last twelve months, the cost to buy a home 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 house one year ago, and then compare it with that same home today, after it has appreciated by 6.7% to $320,100:Is Buying a Home Today a Good Financial Move? | MyKCMCompared to this time last year, you’ll actually save $87 dollars a month by purchasing that home 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 home 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.”

That thought is substantiated by the fact that homeowners have 40 times the net worth of renters. Odeta Kushi, Deputy Chief Economist for First American Financial Corporation, recently said:

“Despite the risk of volatility in the housing 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 home prices still increasing and mortgage rates perhaps poised to begin rising as well, buying your first home, or moving up to a home that better fits your current needs, likely makes a ton of sense.

Latest Blog Posts

Buyers Want a House With These Popular Outdoor Features in 2021

Photo Credit: Dalila Dalprat, PEXELS.COMOwning a house is more than just paying the mortgage and doing simple maintenance. The upgrades and improvements you make throughout your time there will help

Read More

Help Pandemic-Weary Homeowners Create Kid-Friendly Spaces

Belgravia GroupThe Belgravia Group's children's room design in Triangle Square, located in East Bucktown, Chicago.Help Pandemic-Weary Homeowners Create Kid-Friendly SpacesMany families are

Read More

More Borrowers Are Turning to Credit Unions for Loans

Photo by Tima Miroshnichenko from PexelsMore Borrowers Are Turning to Credit Unions for LoansCredit union membership and lending is growing as borrowers increasingly turn to them for

Read More

Mortgage Rates Hold at 2.73% Average for Another Week

Mortgage Rates Hold at 2.73% Average for Another WeekThe 30-year fixed-rate mortgage continued to hover near its all-time low, offering low borrowing costs to home shoppers and refinancers. The 30

Read More