The increase in home prices coupled with a percentage point increase in mortgage interest rates led to a sharp decrease in affordability in 2013. Despite this, current market conditions still warrant buying a home sooner rather than later.
3 REASONS WHY
1) Interest rates are still at historical lows but are poised to increase in 2014. Over the past year, mortgage interest rates increased by about one percentage point, from about 3.5 percent to 4.5 percent. Most of the predictions for 2014 put the 30-year fixed rate mortgage at 5.3 percent.
2) Demand for housing has decreased and bidding wars are not as frequent or as aggressive as we saw earlier in the year. As well, all cash investors have been leaving the market due to a decrease in short sales and foreclosures which gives the average home buyer better chances of getting their offer accepted.
3) More inventory is on the market now compared to the beginning of 2013 which gives home buyers more choices. Prices have been leveling off but will still increase just at a much slower rate than last year.