We are more than halfway through 2017, which means a lot of would-be home buyers in California are asking the same question: Should I buy a house in California now, or wait until 2018? Here is a mortgage and housing market update to help you answer this important question.
Should You Buy a House Now, or in 2018?
There are several important considerations to make, when deciding whether you should buy a house now or later. These include home price trends, mortgage rates, your long-term plans, and the cost of buying a house versus renting.
So let’s look at each one of these factors in turn:
California home prices are expected to rise through 2017 and into 2018.
Home prices across most of California have risen steadily over the last couple of years. But they are beginning to slow down in many local markets, and this cooling trend could continue into 2018.
With that being said, housing analysts and economists expect home values in California to continue rising to some degree over the coming months. There are exceptions to this forecast, but that’s the general consensus for the state as a whole.
The research team at Zillow, for example, recently forecast that California’s median home price would rise by 2% over the next year or so (into June of 2018).
This is a key factor in determining whether you should buy a house in California now, or wait until 2018. There is a good chance that those who put off their home-buying plans could end up paying more for a house, due to continued appreciation.
Mortgage rates are expected to inch upward, despite recent stability.
At the end of last year, mortgage rates rose considerably after hovering around 3.5% for months. But they settle down a bit during the first quarter of 2017, and they’re actually lower now (as of June 2017) than at the start of this year.
According to the weekly market survey conducted by Freddie Mac, the average rate for a 30-year fixed mortgage loan was 3.90% during the week of June 22, 2017. At the start of the year, rates were averaging 4.20%. So they’ve come down a bit since then.
But most analysts, including those at the Mortgage Bankers Association, expect that loan rates will inch upward between now and the end of 2017. If that outlook proves accurate, California home buyers who purchase homes in 2018 could encounter higher borrowing costs.
Buying might make more sense than renting, in the long term.
Back in May 2017, we did a simple cost analysis to compare the monthly cost of renting versus buying a home in California.
Using median home prices and current average mortgage rates, we determined that renters in California could buy a home for about the same monthly cost as renting. San Francisco was one notable exception to this.
It’s also important to note that rents in California are currently rising, and this trend could continue through 2017 and into 2008. But if you buy a house in California, you could gain more control over your monthly housing costs by using a fixed-rate mortgage loan.
What are your long-term plans?
Should you buy a house in California now or in 2018? This will partly depend on your long-term plans. We’ve covered some of the market factors above. But you also need to consider your lifestyle situation and your plans for future residency.
As far as lifestyle goes, buying a house should improve your life some way. That’s the whole point of purchasing a home. So before you do any cost analysis, you need to make sure buying a home is the right move for you to make at this point in time.
It’s also important to consider your long-term plans. If you think you’ll be moving or relocating again in a few years, you might be better off renting. On the other hand, if you plan to stay put for a while, buying a home in California might make more sense from both a financial and a lifestyle perspective.