Home buyers in large cities across the United States are finding it more difficult to afford a new home amidst rising home values and heavy competition from other buyers.
Home prices across the country have continued to rise in 2014 as they have in 2013, but not all cities have been affected equally. The national average for rising home values is currently at 13% from the previous year. By contrast, cities like San Francisco, San Diego and Las Vegas have seen prices rise by as much as 20%.
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But rising home prices are only half of the story. With interest rates rising at the same time, it can actually be as much as 25% more expensive to purchase a home in one of these cities when compared to one year ago.
Buying a Home for the First Time
A number of factors have come together that have made buying a home for the first time a challenge no matter where you live. But with the right amount of preparation the whole process can become very straightforward. Here are just a few tips to keep in mind if you’re looking to buy a new home this year.
- Consider looking at multiple cities when buying a house. The location of a house is the number one factor in determining how much it is worth. For example, two houses that cost the same amount of money can be radically different in terms of quality and makeup depending on where they are located. So, $500,000 might get you something close to a mansion in certain parts of the Midwest. But that same amount of money will most likely only get you a very modest house in someplace like San Diego.
- Review your finances before you start looking for a home. Home buyers can end up wasting a lot of their own time if they don’t first determine what they can afford. Figure out how much you can afford and how much you will be able to put up for a down payment. Getting pre-qualified with a trustworthy mortgage lender can help further expedite the process and save you a lot of grief.
- Try to stay ahead of the curve when buying your first house. Be prepared to act in the event that you come across a good opportunity. This is especially important in today’s real estate market given the number of potential new buyers who are finding themselves priced out of the market. Home prices are expected to continue to rise for the remainder of the year. And interest rates are also expected to climb steadily making it potentially even more expensive to purchase a home that remains at the same price.
Waiting for the perfect moment to purchase a house is never really a good strategy because there are no perfect moments. There are better opportunities and worse opportunities. Given that houses are becoming increasingly more expensive with each passing month, some of the best opportunities to purchase a home are right now.
