During the chaos that housing markets have gone through over the past few years, two issues are very evident. Housing prices have dropped by approximately thirty percent since the peak in 2008; house ownership rates are falling steeply and equal the rates of the Great Depression. However, there is some good news to add to this bad news. Two crucial factors signify that this is a good time to acquire a home, whether you`re planning to live in it long-term or rent it out for income. The first important factor is the ratio of house selling prices to rents, which has recovered to where it was before the real estate bubble. The second factor is the amazing affordability of homes and taking into account the fact that loan rates are at a historic rock bottom.
Buying versus leasing has always been debated and there is a misconception that buying is better than renting. In reality, the answer depends on the financial circumstances that include the cost of financing and real estate selling prices themselves. What can be stated at this point of time with some certainty is that buying seems to be the preferred alternative. The present ratio of price to rent appears to support both prospective investors and potential homebuyers.
Loan rates are crucial criteria of the formula and mortgage rates are currently well below the average rate for the past few decades. Consequently, monthly mortgage payments that are presently available make housing far more affordable than it has been. The Housing Affordability Index, which is maintained by the National Association of Realtors, is at its peak since 1970 and is well over the historic average. This offers you the alternative of either buying a much better home or the alternative of a modest house with a lot lower financial obligation.
Obviously, this will still leave you with a problem of finding a mortgage, since all mortgage lenders now make use of much more tough criteria. Nonetheless, when you have the money for a deposit, an acceptable credit history and a steady job with reasonably secure income, you`ll probably find it less difficult to obtain a mortgage than you think. However, not all housing markets offer you decent bargains and you should be wary even in markets in which selling prices appear to be low. Moreover, many specialists think that selling prices will nonetheless fall a little more just before they bottom out and start to pick up.
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