With home prices in many areas declining to the point where owning a home is a more affordable option than renting, especially in the West, many potential home buyers appear to be getting off the fence and starting to purchase. Add affordable prices to record-low interest rates and the demand for housing has reached a pivotal turning point.
Here are some good things to know…
Home prices in some areas of California have dropped so much that monthly mortgage payments on single-family homes are comparable to apartment rents, according to recent data. Mollie Carmichael, a senior vice president with John Burns Real Estate Consulting, says that in the Inland Empire, the average monthly rent for an apartment is $1,157. Carmichael adds that the average after-tax monthly mortgage payment on a median-priced single-family detached home is $1,154 in the same area.
The large number of distressed properties has led to a surge in home sales around the country. Existing home sales across the U.S. rose 6.5 percent to an annual rate of 4.74 million units in December, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). A senior director of housing economics at Moody’s Economy.com believes the latest NAR report means sales have reach bottom.
Interest rates on 30-year, fixed-rate mortgages averaged 5.12 percent for the week ending Jan. 22, which is almost 1 percentage point lower than the average rate in late November 2008, according to Freddie Mac. The prior week, 30-year mortgage rates average 4.96 percent, the lowest since Freddie Mac began its weekly survey in 1971.