Spring has definitely sprung in Pittsburgh. The birds are singing, everything is blooming, grass is growing and even the air smells fresh. It's a great time to be out and about in the 'Burgh.
It's also a great time to buy a home. Homes have not been this affordable since 1991. According to Fiserv Case-Shiller, the ratio of median home price to median family income is 2.6, down from a peak of 4.1 in mid 2005 and just under the long term average of 2.8. Average principal and interest mortgage payments have fallen from $1063 to $645.
Interest rates have been at all time lows but it looks like the party is about to be over. Two of our clients were recently locked in at rates of 3.5% and 3.75% for 30 year fixed mortgages. A few years ago you couldn't buy a car at that rate. Freddie Mac forecasts a 30 year fixed rate of 5% by end of summer and 6% by late 2012, early 2013. Credit is becoming tighter and you will need a higher credit score and possibly a larger downpayment to qualify for the lowest rates.
In a previous blog post, we reported that college students are graduating with all time high debt and poor job prospects. Many are moving in with their parents, but many others are taking jobs outside of their field of study and renting homes or apartments. In addition, in this area, we have the Marcellus Shale workers. Rentals are becoming more expensive and harder to find. We recently talked to a young couple who are paying $1400 / month for a nothing special apartment. They are purchasing a home and their mortgage payment, including taxes and insurance, will save them $400 / month. In addition, it's much closer to work and they have estimated it will save them another $2000 / year in gas.
In the Pittsburgh area, prices have hit bottom and are on the way back up. People always want to wait until the bottom to buy, but when do you know when the bottom has been reached? When prices start increasing. We are on the upswing. More buyers are out in the market, inventory is getting more depleted, multiple offers are becoming a little more common. These are all signs that the market is recovering.
The weather is great - all buying factors are favorable. It's a great time to look at the possibility of buying a home. Need help? We're here for you. Call or email and we'll set up a personal consultation to explore your options.