2018 was pretty much a seller’s market, but the economy is coming back strong. New housing construction is slowly increasing, but mortgage rates are going up too. It seems the benefits of buying a home are in many ways are offset by the negatives. So how do you get off the horns of this dilemma? To help you out, here are some good reasons why buying a home in Essex County should be your new year’s resolution in 2019.
Mortgage Rates Will Likely Keep Rising
Mortgage rates are higher right now than they were at the beginning of 2018. And predictions by those with their finger on the financial pulse predict that the rates will only increase. So buying a home in 2019 will be a wise move in order to beat further increases and save money over the long haul.
According to the Home Buying Institute, here’s the movement in mortgage rates: “The average rate for a 30-year fixed mortgage hovered below 4% for much of 2017. Then, at the start of 2018, it began a steady upward climb that lasted for three months” In July of 2018, “the average 30-year mortgage rate was 4.52%. That was an increase of 57 basis points (0.57%) from the first week of January.” The question for prospective home buyers is what will happen to those rates in the near future.
According to the Mortgage Bankers Association’s long-range forecast, 30-year mortgage rates would continue to creep upward to about 4.9% by the fourth quarter of 2018 (which has happened) and will continue that upward trend in 2019. In addition, Freddie Mac economists have made a very similar prediction for the outlook for mortgage rates (Home Buying Institute).
What this means for anyone interested in buying a home in Essex County is that the time to buy is now – before rates get any higher. Also, because mortgage rates will continue to climb, sales will likely slow some, which in turn means more inventory and a shift away from a seller’s market to one more favorable for buyers.
Lending Standards Will Relax Some
Another solid reason why buying a home in Essex County should be your new year’s resolution in 2019 is that lending standards are likely to become less stringent than they have been for the past few years. As the Home Buying Institute puts it: “Mortgage lending criteria have eased over the past year, and this could have an impact on the 2019 mortgage market as well. The short version is that it’s generally easier to qualify for a home loan today, compared to previous years.”
First, Freddie Mac and Fannie Mae have been using less strict criteria for purchasing loans from lenders, permitting higher debt-to-income ratios and higher loan-to-value ratios. What this means for people buying a home in Essex County in 2019 is that, generally, they can qualify for a loan while carrying greater household debt and with a lower down payment. This will open up the idea of homeownership to a whole new market of people who weren’t able to purchase a home in the past.
This trend is in full swing right now, as evidenced by the decline in mortgage denial rates. And it is expected to carry through till at least the end of 2019. So if buying a home in Essex County is your goal and you’ve had doubts about qualifying for a mortgage, 2019 just may be your year.
Home Prices Will Continue to Rise
With the current situation regarding supply and demand, the outlook for home prices is that they will continue to climb throughout 2019 . . . and beyond. Many top forecasters believe that the best course for home buyers is to act now before prices get even higher.
Statistics from Zillow show that in the US median home prices rose by a little over 8% over the course of 2018. And predictions are that prices will increase by another 6.5% into and at least through the summer of 2019. Although this trend isn’t uniform across all areas and all markets, it is nevertheless a strong trend that suggests home buyers will be facing much higher prices if they wait too long. If you have considered buying a home in Essex County, the time to act is now!
Perennial Tax Benefits
And then there are the always pleasant tax benefits, which certainly apply to buying a home in Essex County in 2019. These benefits include:
PROPERTY TAX DEDUCTION
Property taxes can’t be avoided, but with this deduction, you can get some money back at tax time. The average American household pays a little more than $2,000 in yearly property taxes, and the more you pay, the more you can deduct. This can help you offset many other costs of homeownership.
MORTGAGE INTEREST DEDUCTION
This can be a fairly significant tax break in the early stages of mortgage payment when the bulk of each payment goes toward interest rather than the principal. Don’t forget to include this when filing your taxes.
HOME OFFICE DEDUCTION
For the freelancers, self-employed, and others who work from home, the IRS allows you to write off a portion of your home office expenses, things such as heating and lighting costs, water, and Internet and phone. Utilizing these deductions can make a huge difference in your finances.
So are there good reasons why buying a home in Essex County should be your new year’s resolution in 2019? The answer seems to be a resounding “Yes!” These reasons include mortgage rates and home prices that will continue to rise beyond 2019, the more relaxed mortgage lending standards, and the definite tax benefits. Now is an excellent time to buy real estate in Essex County and beyond!