Was buying a home in Knoxville cheaper six months ago? YES. Is it still a GREAT time for buying a home in Knoxville? YES!
Limited inventory and rising prices have created a seller’s market in Knoxville and we are seeing buyers competing fiercely for homes, even to the point of bidding wars, but that doesn’t mean that it’s still not a great time for buying a home in Knoxville.
Here is why:
- HOME PRICES ARE STILL RISING
Because the housing market bottomed, reaching it’s lowest point in March of 2012, the price gains that we have seen recently still leave plenty of room for the home values to climb. What is causing the rising prices? Lack of supply, which is the result of slower homebuilding activity, diminishing foreclosures, and sellers slow to come to market because they are waiting for prices to increase further (much of this is because sellers who purchased during the height of the market owe more on their homes than their current value).
- RATES ARE LOW BY HISTORICAL STANDARDS
Mortgage rates, currently hovering around 4.6 percent, have increased by a full percentage point since May – but they are still lower than they were just two years ago and far lower than the long-term average of about 8 percent.
- GETTING A HOME LOAN IS SOMEWHAT EASIER
Because of the rising interest rates, less people will be refinancing, making banks more willing to work with homebuyers. Don’t get me wrong, the days of the “no-documentation”, “no down payment” days are long gone, but credit is available for borrowers who are qualified.
- OWNING A HOME IS STILL CHEAPER THAN RENTING
Even taking the recent price and rate increases into account, it is cheaper to buy than to rent in all 100 of the largest real estate markets, according to an analysis by Trulia.com. Nationwide, assuming a buyer stays in a home for at least 7 years, it is 37 percent cheaper to buy than to rent. Actually, studies show that in 78 of the largest 100 markets, rates would have to more than double to over 10 percent for markets to tilt in favor of renting.
- INVESTOR COMPETITION IS DECREASING
Many of the factors stated above are driving investors out of the market. The reduced amount of foreclosures coupled with rising prices are making investors lose interest. Chief Economist with the National Association of Realtors, Lawrence Yun stated, “Investors are recalculating their numbers, because it might make less sense for them to buy in order to flip or rent now. That’s an opportunity for primary owner-buyers to have less competition and still a historically favorable environment, even if affordability is weaker.”
As you can see, it’s still a great time for buying a home in Knoxville. But make no mistake, prices are still increasing and rates may as well. The sooner you can buy the better. Contact us today to get started!