Why should I buy a house in a seller’s market?
What makes a housing market better for sellers versus buyers?
Seller’s Market:
A Seller’s Market occurs when inventory is low and housing demand is high. It allows Seller’s to control more of the market, demand more for their property and do less for a buyer.
Buyer’s Market:
A Buyer’s Market occurs when there is more inventory than buyers, and housing demand is low. It allows Buyer’s to control more of the market by asking for Seller Concessions, requesting repairs and getting a better purchase price.
So, doesn’t it make sense to wait for a Buyer’s Market? Sure, if you can, however, you might be missing out on an opportunity to build equity. Look at it this way:
Rent: $2000 per month for 2 years = $2000 x 24 months = $48,000 - at the end of 2 years you have spent $48,000 and received nothing but a roof over your head.
Deposit: $4,000 (first & last month rent)
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Home Purchase: $269,900
Down Payment: 3% ($8,097) - there are many programs that help with Down Payment Assistance
Principal & Interest: $1653 per month plus $162 property taxes plus $94 homeowners insurance plus Mortgage Insurance $115 = PITI $2,024 per month
Amount spent over 2 years: $48,576
Amount spent over 2 years plus 3% down payment: $56,673
Mortgage Balance at end of 2 years: $231,103 (based on 6.49% mortgage interest)
Market Growth 5.5% per year on average 1992-2023 = 11% or $299,589
Home Equity: $68,486
Estimated Tax Write-off year 1: $16,495 mortgage interest + $1944 property tax
Estimated Tax Write-off year 2: $15,455 mortgage interest + $1944 property tax
So at the end of two years you have gained at least $68,486 in value.
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Home Purchase: $269,900
Down Payment: 0% if the house qualifies for a USDA loan, no down payment is required.
Principal & Interest: $1690 per month plus $162 property taxes plus $94 homeowners insurance plus Mortgage Insurance $115 = PITI $2,061 per month
Amount spent over 2 years: $49,464
Mortgage Balance at end of 2 years: $238,250 (based on 6.49% mortgage interest)
Market Growth 5.5% per year on average 1992-2023 = 11% or $299,589
Home Equity: $61,339
Estimated Tax Write-off year 1: $17,005 mortgage interest + $1944 property tax
Estimated Tax Write-off year 2: $15,933 mortgage interest + $1944 property tax
