We’ve all heard the horror stories, 20 offers were put in on a home. The sellers picked an all cash, over asking offer that waived all contingencies. In fact, I’ve been on both sides in the past few years. Maybe you’ve been there too!
News articles all say the same things: there is no affordable housing, interest rates are going up, inventory is at historic lows. We’re constantly being bombarded with all the negatives of buying a home. It’s enough to make anyone give up and resign himself or herself to renting for the rest of time.
I’m here to tell you - I think that would be a mistake! Bear with me for a moment, because I realize I just highlighted all of the reasons you shouldn’t enter the buyer’s market right now. But, I think all of these statistics are leaving out some incredibly important information.
As I like to say, I don’t have a crystal ball. Full disclaimer, I am not a market analyst, I don’t make my living predicting the markets, and my opinions should not be accepted as fool proof. I am just a humble Real Estate Advisor. I do, however, spend a lot of the time studying the Boston real estate market and national and local market trends.
Investment Perks
Whether you realize it or not, the day you purchase your first home you become a real estate investor. Many investors and market experts are predicting up to an 11% increase in home value growth (Zillow) in 2022. Homes in the Greater Boston area are often holding their value, if not increasing to match the national trends.
Stock market volatility and the recent stock market correction has certainly made real estate a more attractive investment over the past few months. Additionally, real estate is a great hedge against inflation.
Rising Mortgage Interest Rates
Yes, interest rates are higher today (by approximately 1.25%) than they were at this time last year. When applying for a loan today, it wouldn’t be unexpected to see a rate in the 4s%. From a historical standpoint, a rate in the high 3s% to 4s% is about on par with where things were pre-pandemic.
However, an interest rate in the 4s% today is not the same as it was in 2019. With an inflation rate of 7.5%, the actual interest rate is a negative 3.5% (Financial Samurai). Free money! There hasn’t been a better time to borrow.
Homestead Advantage
Owning and living in your primary residence affords a level of protection to you and your family. Massachusetts has what are called Homestead Laws, that protect equity in your primary residence in case you default (mass.gov). This helps protect you and your family from ending up on the street.
Additionally, the city of Boston gives tax advantages to owner occupants. This allows you to take tax deductions - just for living in your home. Overall, there are many tax advantages to owning property.
Finally, Boston is experiencing a significant increase in rental prices, with rent prices up 8.8% from March 2020 prices (Boston Herald). One of the best aspects of a mortgage payment is that if you elect for a fixed rate loan your payment never changes. Even better, a portion of your mortgage payment goes into the equity of your home. This allows you to build your net worth over time, and makes it so your housing costs aren’t just another constantly growing expense.
I think there is incredible value and opportunity in the Greater Boston market, if you can embrace some of the challenging conditions. At the very least, it doesn’t hurt to consider it!
Resources:
financialsamurai.com/ideal-environment-for-real-estate-investors
https://www.washingtonpost.com/business/2022/01/10/2022-housing-market-predictions/
Through his many resources and relationships in the industry he will make sure your house will sell for the highest possible price, in the least amount of time, with the least amount of hassle.
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