More than half a decade has passed since the housing crash in 2008, and curious homeowners and renters are ready to explore the market again. For homeowners who were unable to move because their houses lost value, or potential new home buyers who opted to rent rather than commit to an unstable market, we have good news – it’s an outstanding time to buy. We are in the midst of a mini housing boom! Right now interest rates remain low and the value of homes in many regions across the U.S. are headed to pre-2008 levels and higher. If you wait you could miss out.
Should you buy or rent your next home?
The first question that usually comes up in conversations about buying in the current real estate market is: Do I want to buy now or just rent and wait until I can rest easy that the market is fully recovered? The answer is buy now! With home prices and interest rates as low as they currently are, it is renting that can cost you big over time. Zillow’s Rent Index reveals that renters nationwide are spending nearly 19% more of their incomes on rent than they did just a decade ago. This is due in part to the fact that rent costs have increased 52.8% while median incomes have increased only 25.4%.
In Baltimore, renters are averaging nearly 30% of their incomes going to rent, which Zillow states is at the threshold of having adverse effects on financial stability. According to Trulia, buying a 120k home is 39% percent cheaper than paying $1000/mo in rent over the course of 5 years in Baltimore. The prices are even more exuberant, in the Washington, DC area, with buying costs coming in at 41% cheaper than renting! When you increase the years, the savings get higher and higher.
The Maryland Housing Market climate
So, you’ve chosen to buy rather than rent. What are you getting into? In 2013 and early 2014 the median sales price of non-distressed homes (ones not in foreclosure) in the Baltimore area skyrocketed. According to RealtyTrac they jumped from 129.9k to 145k from June to August alone. Since then, they have dropped and slowly risen again, but fluctuations are normal during periods of economic recovery. The facts remain that, despite the ups and downs in the market, prices and interest rates are low. So, don’t be afraid to buy the home you’ve had your eye on. If you remain patient with your investment and weather market changes, it will pay off in the long run.
But, what about those foreclosure homes? Well, the news is even better. Prices on foreclosed homes in Baltimore stayed consistent throughout the year, but are available at 56% lower prices than non-distressed homes, according to RealtyTrac. A home in foreclosure is an outstanding option for bargain seekers, but you must act on these homes right away. Buyers looking for an inexpensive investment with a potentially large payoff continue to take these off the market, which means the pool of these more affordable, bank-owned homes is diminishing by the day. It may be time to muster up your buying courage and take the plunge before they become harder to find and more expensive.
In short, it is smart to be bold and resilient in today’s housing market. Buy a home now while the timid wait and in a few years you just might look like a financial genius.