If you are looking to downsize into a home, or if you are going to relocate for employment, you may not have many other options than to buy a house in 2020. Other reasons more people are looking to purchase a house this year is because they do not want to continue paying rent because they feel as though it is money going down the drain. If you have decided that you are buying a house this year, the following guide will take a closer look at the housing trends that were ushered in at the beginning of this decade. This way, you will know if this year is favorable or not to start the homebuying process.
Interest Rates and Mortgages
Unless you were lucky enough to win the latest lottery drawing, chances are you will have to get a mortgage in order to finance your house.
Ever since the devastation that hit the market in 2008 due to the Great Recession, the interest rates on most mortgages have declined. Currently, they sit at a little less than four percent. Because 2020 is an election year, the state of the economy this year will be one of the determining factors that will determine election results.
Most financial experts believe that the stock market will remain stable and it will also see huge spikes during the year. This means that interest rates will likely remain very low. This is excellent news for homebuyers.
The First Step In Buying A House Is Pricing
First time homebuyers may be confused about all the steps that are involved in buying a house. However, pricing is the one step that almost everyone understands.
Home prices have been steadily increasing in many parts of the country. In fact, some regions are experiencing increases that are in the double digits.
Over the past 10 years, there have been fewer homes on the market because homeowners are choosing to stay where they are. So, when the supply cannot keep up with the demand, buyers can expect home prices to increase. This also means that if the economy remains stable, home prices will rise.
For example, when the country was in the deepest part of the recession, a condo that cost $170,000 in downtown Atlanta may have lost between $10,000 and $20,000 of its value. However, in 2020, the same condo can easily have an asking price of over $250,000.
In other areas of the country, some property never recovered after losing their value in 2008-2009.
So, what does all of this mean? The amount of equity your property will keep during an economic downturn will be dependent on where you decide to purchase a house.
The Second Step In Buying A House Is Qualifying
Even though it is still early in the new year, 2020 is showing that it is an excellent year for those who want to buy a house. Even though interest rates are at historic lows, it may not be as easy to qualify for a mortgage loan in 2020 as it was in 2006. However, the qualification process is a lot easier than it was in 2012.
Many homebuyers are finding out that lenders have eased up on the qualification process. There are some lenders who no longer place as much importance on common debts among homebuyers such as student loans and medical bills. So, unless another recession appears like the banking crisis of 2008, 2020 will be a great year to finance a house.
The Third Step In Buying A House Is Technology
If this is your first time buying a house, or it has been over 10 years since you last purchased a home, get ready to meet the new 21st century houses that are on the market.
New building construction has smart home technology. From security systems to HVAC systems to lighting, these systems are controlled by smart technology. This type of technology is becoming the norm in modern houses and is usually not an option. Some of the best smart home technology currently on the market allows homeowners to manage and control their homes from anywhere via a totally automated system.
The Fourth Step In Buying A House Is Taxes
Several years there was not a cap on deductions for mortgage interest. However, now there is. The IRS says that homeowners cannot have combined deductions that are over $10,000. Those who married but are filing separately cannot have combined deductions that are more than $5,000. This combination of deductions includes:
- Property taxes
- Local and state income
Some homeowners may also find that they may have a limit placed on their itemized deductions also.
Factors such as the economy should not be the only reason why you choose to purchase a house at a certain time. During a terrible economy you may still need to buy a house. In this type of situation, you should not look at your house as simply an investment, consider it an investment that will provide you and your loved ones with a place to call home.