Virginia Housing Market Trends: Why Now is the Time to Buy
Posted on April 12, 2017 at 8:00 am
Written by Chuck Carlisle
Buying a new home is a huge decision for your family. You’ll have to consider what you need in a new home, what neighborhood is right for you and even if the time is right to purchase a new home.
Though you’ll have to decide when the time is right to move your family, LifeStyle Home Builders has advice on when to buy a new home based on the economy.
When to Buy A New Home in Virginia
The housing market often sends signals that it’s a good time to make a home purchase. To determine if it’s a buyer’s housing market, look for these signs:
Interest Rates Are Low
Your mortgage interest rate has a huge impact on how much you pay for your home. Just a half of a percentage point can make thousands of dollars of difference in your total home cost.
Mortgage interest rates are still historically low. While in the 90’s, mortgage rates were up to as high as 14 percent, the Federal Reserve still has set interest rates much lower, resulting in mortgage rates around 4 percent.
However, the Federal Reserve is bringing the interest rate back up as the US economy grows stronger. It’s likely that the mortgage interest rate will continue to climb into 2018 and beyond. Higher mortgage rates mean you have less buying power than before since your monthly payments will increase if mortgage rates increase.
When interest rates are low, you can buy more expensive homes for less cost than when rates are high. As a bonus, as rates rise, your home equity rises even though you still enjoy low interest rates.
Stock Markets Continue to Grow
When the economy is showing signs of growth, such as a strong stock market, you can feel more confident that it’s the right time to buy a home. Though not always the best predictor, a high stock market typically means the economy is headed in the right direction and it is safer to make large purchases such as a home.
In today’s new political climate, the stock market has continued to rise, with the Dow Jones Industrial average (generally used to measure market strength) closing above 20,000 for the first time in America’s history. More consumers feel confident in making large purchases than they have for almost a decade, leading to a strong housing market today.
Virginia Unemployment Rates Are Low
Most people won’t buy luxury cars or homes when they are worried they may not have a job in 6 months. A low unemployment rate may indicate a strong economy that will continue to grow and increase job security for many workers.
In Central Virginia, the local economy has come back strong from the recession as many people relocate to this area for new jobs and businesses. The Virginia unemployment rate is at a low of 3.9 percent, well below the national rate of 4.7 percent and the second lowest unemployment rate of any major US State. With so many Virginians at work, our region is likely to continue to grow, improving Virginia’s housing market and helping families here move into their dream homes.
Costs of Building A Home in Virginia Are Rising
Costs of building a home have a huge impact on its listing price. When you see these costs going up, it likely means that there’s a high demand for construction, another indication of a strong economy. If these rates continue to trend higher and higher, you may want to buy a home sooner rather than later to lock in your lower prices.
Currently, costs of lumber, sheetrock and even labor are going up due to increased demand. Many areas of the country, including Richmond, are seeing increased construction, leading to labor and lumber shortages. These costs are expected to continue to rise over the next few years.
Buying a Customized Home or Inventory Home
Inventory homes (homes that are already built) are not affected by today’s costs or building prices. These homes are often priced based on costs that were determined six months or earlier, meaning they can often cost less.
If you find an inventory home that you love except for minor details (paint, flooring or fixtures), you may find you save more money by buying these homes than a fully customized home. You will need to weigh out your costs to determine the best choice.
At Lifestyle Home Builders, we provide both designer inventory homes and custom signature homes to fit your family’s needs. Right now, we’re running a few special offers on homes in specific communities. Take a look to see how you can save even more when buying today.