During the past few years, a term often used to refer to the housing market has been “buyer’s market,” meaning that more homes have been on the market than there were interested buyers. This excess demand lowered the cost of homes and made it the perfect time to invest in a property. The coming year will continue to be a good time to purchase a home, but veterans should be aware of increasing home prices.
Home prices are rising
In November 2012, average home values were up 5.2 percent compared to one year ago, according to the Zillow Home Value Index. It was the largest gain in a year since August 2006. Twenty-five of the nation’s largest metropolitan areas saw gains in their home values, including Sacramento, Detroit, Las Vegas, San Francisco, Phoenix, and Riverside, California. Although professional forecasters predicted home prices will rise in 2013, Zillow Chief Economist Dr. Stan Humphries said they will grow at a slower pace.
Rent is also rising
Low home prices may be good news for veterans who are renting but looking to become homeowners. Rent rates have also risen, making homeownership more affordable than renting in some areas. Nationally, rents rose 5.2 percent from year-to-year, according to Trulia. The cities in which rents increased more than home price were Houston, Chicago, Philadelphia and Baltimore. Other metro areas that saw the biggest percent change in rent prices – anywhere from a 6 to 16 percent increase – include Oakland, Miami, Denver, Seattle, New York, Boston and Portland.
When to act quickly
There are a few cities that veterans might want to be aware of where home prices grew faster than rental rates, signaling a need to buy quickly if homeowning is your goal. These markets were Phoenix, Las Vegas, Sacramento and Riverside-San Bernardino, California. If you are still trying to decide whether to rent or buy, good things to keep in mind are if you can see yourself in the area several years from now, if the home will fit your changing lifestyle and if your income will hold steady for years.
If you are still wavering on a decision, keep in mind that if you are waiting for the right moment to use your VA loan benefits, 2013 may be it.