Home Values and Inflation Rising in 2014
Everything is becoming more expensive in 2014. We are only into February but economists are predicting cost of living to rise significantly this year and inflation to rise. Healthcare premiums have gone up drastically for many families as well as everything from gas, to college education, to travel, to food. Housing which is your largest expense is going up as well!
Rent
According to Zillow, Rents are projected to rise 2.5%. We are already having record highs for many rental markets but it will continue to rise in 2014 and beyond. The market right now has limited supply and the demand keeps getting higher. Many people who were qualified to purchase are not forced to rent due to the high foreclosure rate, economic uncertainty, and the tight credit restrictions. Americans are typically spending over 30 percent of their income on rent which is up 10 percent from a decade ago.
Home Values
Zillow predicts home values to increase by 3% nationally. 2013 had double-digit gains in many markets but this year will be much more conservative since interest rates are on the rise. Home prices are already back at peak levels in some areas.
Interest Rates
Zillow predicts that interest rates will go up to 5% by the end of the year! Since the fed is tapering its bond purchasing programs and the economy continues improving, the rates are projected to rise from 4.6% to 5%. This will make homes much less affordable. The monthly mortgage payment on a $200,000 note will rise $160. The silver lining is that less people will be refinancing this year forcing the banks to increase their lending on new purchases.
In Conclusion
With rent going through the roof and interest on the rise, now is a great time to buy. In many areas of the country, people are paying twice as much renting a home as they would if they purchased it. That is why it a great time to become a home owner.
If you are interested in owning a home here is the steps you should take:
- Get a good loan officer who can lock you in at a good rate now. Get them all required documents and get your pre-approval so you know what you can afford
- Work with a great local Realtor that understands your needs and wants
- Hit the pavement because good deals do not last long
- Make an offer on the house you like
- Get an offer accepted
- Get a home inspection
- Close, get the keys, and move in. Congratulations, you are now a home owner!
Happy home hunting!
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