Have you been kicking around the idea of buying a home in Farragut or Knoxville? If you are, I’m sure you are getting lots of advice. Friends and family, who no doubt have your best interests in mind, can be a great resource to bounce ideas off of, but they might not be fully aware of the current state of the Farragut real estate market. There are many factors that go into buying a home, but let’s take a look at whether now is a good time as far as current market conditions.
If you are thinking of buying a home in Farragut or Knoxville, here are 3 questions to ask yourself before buying a home in today’s market:
Question #1: What is the reason that I’m buying a home for in the first place?
Of all the questions, this is really the most important. Finances aside, what is the reason you want to buy? Because usually the reason has nothing to do with finances. The Joint Center for Housing Studies at Harvard University recently conducted a study which revealed that there are 4 reasons why people buy a home, and none of them have to do with money. Here are the reasons:
- Looking for a good place to raise children and for them to get a good education
- Looking for a place where you and your family can feel safe
- Looking for more space for you and your family
- Looking to control the space you live in
Now don’t get me wrong, Harvard is great, but the real reason I know the points above are true is because it’s what I hear from my buyers. In fact, I just heard it again today over lunch with a client I have relocating from California.
So what benefits (non-financial) will you and your family get from owning a home in Farragut? This question is important, because it should be the top reason you decide whether to buy or not.
Question #2: Where are the home prices headed?
I don’t have a crystal ball, but I do have some very smart experts that I follow. These experts put out the “Home Price Expectation Survey.” Every 3 months, a nationwide panel of over 100 economists, real estate experts, and investment and market strategists are surveyed as to where they feel prices are headed over the next 5 years. The report then takes those 100+ expert projections and averages them into a single number.
Here are the expert projections from the latest survey:
- Home values will appreciate by 4.4% in 2015.
- By 2019 the cumulative appreciation will be 19.3%.
- Even the most conservative of the experts are still projecting a cumulative appreciation of over 11.9% by 2019.
Question #3: Where are mortgage rates headed?
When buying a home, unless you are paying cash, you need to be equally concerned about mortgage rates and where they are headed. Why? Because your mortgage rate directly effects how much money you are paying out every month as well as how much extra interest you pay over the life of the loan.
The National Association of REALTORS®, Mortgage Bankers Association, and Freddie Mac all project that mortgage interest rates will increase by approximately one whole percentage point over the next year.
What does this mean for you?
Only you really know when it’s the right time to buy your next home, or your first home, but answering the questions above might help you make an educated decision. Hopefully sooner than later because we know if prices and interest rates are expected to rise, either you will spend more money to afford the same house a year from now, or you will pay the same amount of money and be forced to buy something less expensive. Numbers are very important, but even more important is the real reason why you want to move. Is it time? If you have any questions about buying a home in Farragut or Knoxville or are looking for expert assistance, don’t hesitate to call or text me, Troy Stavros with Gables & Gates, REALTORS at 865-999-0925. I’d love to help. I’m here to serve you!
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