All signs are pointing to a brighter housing market in Minnesota!
If you have been waiting on the sidelines, hoping to jump into the market and buy a home before prices increase, get ready, get set, go!
“But, Sheryl, I can’t sell my current townhome because I owe more on the mortgage than the value of the property?” If you can secure a new mortgage without selling your townhome consider renting it this upcoming year and buying now.
There are three important reasons to act this year.
1) Home prices will begin to rebound and strengthen sooner and faster than townhome values. The reason for this is just simple market forces. In Lakeville, Apple Valley, Eagan, Rosemount and Farmington we reached a point of over-saturation in the number of he townhomes built by 2006. It will take some extra time before the townhome demand catches up with the over abundance of property.
2) The Interest Rates are so low, this is a ‘once in a lifetime opportunity’. I don’t think interest rates are going to rise dramatically in the very near future. It will really depend on what happens in the economy. The Fed recently announced they will continue QE-3 indefinitely. However, make no mistake about it, there will be a point in the fairly near future when we will look back and say, “Wow, I should have gotten a house when interest rates were 3.5 percent.”
As a side note, I wonder how the market will adjust when, let’s say in 2016 the interest rates for mortgages are back to the 6-7 percent range? There will be many homeowners who decide to stay in their home longer to avoid having to buy a house at a higher interest rate.
3) The rental market is hot and you should be able to secure a good renter for the next two years. There are so many people who have been displaced through foreclosure or short sales, they need to rent for three years before they can qualify for a mortgage. Many renters in our area were once homeowners and wish to purchase again, they understand the importance of maintaining a home and keeping it in good condition.
Qualifying for a mortgage while you own a property with a mortgage is not easy. If you can qualify, seriously consider buying a home now, at one of the lowest prices possible, at the best interest rates ever, rent out your townhome and then sell it in two years when you can break even, or maybe even make a little money from it.
One more benefit of buying now is that many mortgages are assumable with qualifying, including all FHA loans. This means when rates are higher in a few years, homeowners with low interest rates can offer an assumable mortgages of 3.5 percent, a real advantage for your re-sale value.