It’s not hard to find bad news these days. Most days it feels like it swarms around us like we are a jar of honey, and the media is the bees. Journalists like to seek out the unpleasant and focus on it for the clicks. A headline of “Mortgage Rates Still at Historic Lows” will sell much less than “Buyers Panic as Mortgage Rates Skyrocket.”
This market is not like the 2007 “Bubble” market
If you followed the media mantra you would be scared to think about buying a house right now. People who choose to rent are making a big mistake. This market is not the “Bubble” market of 2007. Home prices are not overinflated, and most economists do not expect a price correction in housing values anytime soon. Yes, there will be some price reductions, but that is not an indication of values decreasing as much as it is an indication of less buyers being in the market.
The bust of 2007 was caused by government intervention into mortgage practices where unqualified buyers were offered high risk mortgages that were then packaged up and sold to investors. When the market corrected slightly, many buyers pulled the plug and let their homes be foreclosed. Everyone knew there was trouble brewing when builders were saying “Why rent when it’s cheaper to buy a house?”
There is no comparison to what is happening in the real estate market now. Mortgage rates in 1981 hovered near 18%. It wasn’t until 2005 that rates came down to today’s levels. Current mortgage rates are still some of the lowest in the past 50 years.
Homeownership gives you options
When you sell your primary residence, you have an exemption from paying any capital gains taxes on $250,000 for a single person and $500,000 for married. No other significant profit transaction is given this pass by the long arm of the Federal Government and the IRS. This tax savings can make the difference between a happy retirement or one where you rely solely on the small Social Security check you get -- if Social Security is even around when you retire.
Real Estate has always been a safe haven for capital for the investor who can sell when they choose. There are always ups and downs, but the long-term trend is always higher. Your primary residence can be a tax-free investment that grows as it provides you with shelter. There are no tax advantages for a tenant but there are plenty for the landlord.
Now is a good time to buy
Why rent when there are so many benefits of being a homeowner? Yes, rates are higher now, but it is still the best time to buy if you plan on living in the house for 5 or more years. If rates go down, you can refinance. Very few economists are predicting plummeting home prices. There still aren’t enough houses for the people moving to desirable states like Texas and Florida. If you wait, you’ll be kicking yourself for years to come.
That’s where a trusted real estate agent comes into play for your benefit. Talk to one who knows the market you are looking to buy or sell in and get the real information on what your options are. Dripping Springs Elite is NOT a brokerage. It is a professional organization comprised of top real estate agents in the area from different brokerages who collaborate and work together to make buying and selling in their town the best it can be for their clients. We are also dedicated to building up our community and its nonprofits to strengthen the quality of life for all residents. Contact one of our agents today or ask for one of our members to contact you.
Article created for DS Outlook July 2022