Why Buy a Luxury Property This Year
If you’re looking to trade-up to your dream home, now’s a good time to buy a luxury property. Timing is everything when buying high-end, especially if you want to keep your home loan payments as manageable as possible. The good news is that the premium house market isn’t as intimidating as you might think. For that matter, here are three reasons to move up and buy a luxury property this year.
1. More Inventory of Choices
An article by the Wall Street Journal reported lower demand and higher inventory of properties in the luxury home market. According to 2016 data from the National Association of Realtors, the “inventory of homes priced from $500,000 to $750,000 rose 15.9% in March compared with the same period last year, and the inventory of homes over $1 million rose 12.6% year over year.”
A rise in inventory breeds more opportunities for finding a property with the features and amenities you prefer. Because of a greater supply, some luxury homes also sit on the market longer. As sellers become impatient and motivated, buyers enjoy increased negotiating power.
2. Luxury Home Prices are Dropping
You might be reluctant to enter the real estate market based on observations of higher prices. But while the values of moderately priced homes in your area might increase, luxury home values as a whole have decreased in response to lagging sales.
Realtor.com reported that in January 2016, “4.1% of for-sale homes priced at $5 million or above got a price cut, a 50% increase over January 2015.” The average price cut was $501,000, or 7.2% of the listing price.
One real estate veteran had this to say about dropping prices in the luxury market, “The growing number of price cuts suggest luxury home sellers are becoming more realistic about property values as sales have slowed.”
3. Historical Mortgage Rates
Although mortgage rates are predicted to increase in 2017, rates will remain historically low, making now an excellent time to jump into the luxury home market. Not only will you find lower rates on conforming and government loans, but also reasonable rates on non-conforming jumbo loans. A low mortgage rate is essential to a lower mortgage payment. To Illustrate, if you borrow $750,000 at 4.2% for 30 years, excluding taxes and insurance you’ll pay about $3,668 a month. If you wait and purchase the same property when rates increase to 5.2%, your monthly payments jumps to $4,118. That’s a difference of over $400 a month.
Between lower prices, greater options and low mortgage rates, now's the time to buy your dream home. Talk with our mortgage experts for mortgage financing information. Learn about jumbo loan limits or our medical doctor mortgage program designed specifically for doctors and residents.