Most Americans consider owning a home, of their own, to be an important component, of the American Dream. While many consider personal financial issues, such as their personal Credit Rating/ Score, their debt – ratio, the necessary funds needed for the downpayment, and sufficient reserves, for many other possibilities/ eventualities, it is also important to understand how, often, forces outside of one’s personal control, such as the overall local, regional, and national economies, real estate inventory or houses, currently listed, on the market, Federal Reserve policy, availability of mortgages (and types), interest rates, etc, are all essential considerations, needed, by potential homeowners. With that in mind, this article will attempt to, briefly, consider, review, examine, and discuss, a few of these factors, which a wise buyer, will consider thoroughly.
1. Local, regional, and national/ international economies: One must consider, and examine, the current trends, with an understanding of the historical trends. and future possibilities. Sometimes, there are certain local factors, and/ or, nuances, which relate to buying a house. Since real estate markets are local, it’s important to understand the trends, competition, relative pricing, and, whether the specific region, best serves your needs, and purposes. There are also differences, from one region, to another. Are the professionals, anticipating, a specific change in interest rates, which might impact availability, pricing, and qualifying, for a mortgage, and what it might cost? An educated home buyer, makes the best decisions?
2. Mortgages: When mortgage interest rates are relatively low, one is able to buy, more house, for his money. However, it’s important that one ramification of that, often, is home prices, tend to rise, during these periods. When mortgage rates rise, the monthly, carrying – charges, go up, and that has many impacts. The obvious is, it makes it more costly to own and reside in a specific house. One overlooked ramification, often, is, it also makes qualifying for a mortgage, more difficult, because, it impacts, the debt – to – home ratio, and if rates increase, from low rates to more historical levels, the amount due, each month, will rise, significantly, and some might not qualify, at the more expensive, costly level. This might create fewer qualified, potential, home buyers, and the ramification, often, is, lowering home prices. The economic theory of Supply and Demand, states, when there are fewer buyers, the market might transform from a Sellers Market, to a Buyers Market.
When seeking a house, don’t overlook the impact any economic factor, might have, on your local marketplace. The more informed/ educated/ prepared, the better the possibilities/ probabilities!