You’ve been thinking hard about purchasing a home. You’ve settled on a home in Mission Bay in West Boca Raton, but you can’t quite make up your mind. Buy that new home now or wait until you’ve saved just a bit more in six months or a year? Well, here are four good reasons to buy that home in Mission Bay now.
Reason # 1. Home prices in Mission Bay will continue to rise due to high demand and low inventory.
Homes in Mission Bay are currently priced from $240,000 for a 3/2 townhome of just under 1600 square feet to a 4 bedroom 4 bath single family home of almost 3,000 square feet at $519,000.
Between those prices, there are just 12 Mission Bay homes currently available. Within the last year, of approximately 1500 homes in the subdivision, 31 were sold. That’s approximately a 2% turnover. In buyers’ markets we’d expect a 5-10% turnover.
As a result, inventory is tight and prices continue to rise. According to the National Association of Realtors (NAR) median prices in the nation are expected to rise by 4.5% and Florida’s home prices are projected to increase from 5 – 7% because of continued low inventory and increasing demand.
That means a home in Mission Bay currently priced at $440,000 will be priced from $462,000 – $475,000 within 12 months.
Reason # 2. Mortgage rates are expected to rise between ½ to 1%.
We already know that homes in Mission Bay are likely to rise in price. The Mortgage Bankers Association predicts a rise in mortgage rates of between ½ to 1% as the Federal Reserve looks toward putting an end to its bond buying program as of October.
But, as Preston Ware of the Mortgage Firm suggested, that half to full point rise in mortgage rates is also going to make a big difference to Mission Bay home buyers buyers across the board.
On a 30 year fixed rate mortgage of $250,000, for example, current payments for interest and amortization on a Mission Bay home in West Boca Raton are about $1266 per month. Remember, that payment does not include taxes, insurance or private mortgage insurance (pmi), which is paid on mortgages that put down less than 20%.
If mortgage rates on your new home in Mission Bay rise by just half a percent (to 5%), your monthly interest and amortization payment moves to $1342. With a full percentage point, your mortgage payment becomes$1419.
Will most people find these prices insurmountable? Probably not. But, as Ware points out, over the lifetime of your loan, on just a half point rise in interest, you’ll pay an additional $27,360 for your new home in Mission Bay.
Reason number 3. Rising home prices and rising mortgage rates make qualifying for a home loan more difficult.
Finding a home in Mission Bay is tough enough today because of narrow inventory. However, as prices rise and mortgage rates increase, qualifying for a loan will become more difficult.
Unfortunately, wages are not rising at the same rate as Mission Bay home prices; and the higher the cost of a home, the higher the debt to income ratio that the bank will be looking at.
As mortgage banker Ware indicates, FHA guidelines call for up to 28% of pre-tax income to be applied to housing costs, and another 10% to overall debt. Conventional loans allow a similar percentage for housing debt, but slightly less (8%) for additional debt.
When you’re ready to purchase your home in Mission Bay, it is always a good idea to talk to a mortgage banker first. He will be able to prequalify you and give you an idea of how much house you can comfortably afford.
Reason number 4. The millennials are coming. Competition for scarce inventory is about to heat up.
While inventories of Mission Bay homes in West Boca Raton remain low, the number of millennials moving into the work force continues to increase. Also known as “generation Y,” they are moving out of their parents’ homes, starting families, and looking for new homes of their own.
This means increased competition in the marketplace for scarce inventory. This sometimes results in bidding wars, which drive up home prices in Mission Bay beyond where they should be.
If you’re able to purchase your Mission Bay home in West Boca Raton before the competition heats up, you’ll be sitting on a rising asset. You are likely to benefit from the price increases that low supply and high demand generate.
Right now, home prices in Mission Bay are relatively reasonable. More important, mortgage rates are still at historically low levels. If you’re sitting on the fence, (which can be very painful) but you think you’re ready to purchase your new home in Mission Bay, please call your Mission Bay real estate agent, Marc Jablon.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions