Is Now Best Time To Buy A Home In Virginia
Virginia, Maryland, and Washington DC have not been immune to the recent crisis in our economy. Maryland has experienced both the highs and lows of the boom-bust cycle while Washington DC has taken a hard hit. Renting in Washington DC is now quite difficult and rental prices are high. Of the three, Virginia has continued to soldier on and given the future outlook, now could be the best time to buy a home in Virginia.
There are several factors on the horizon that will have a significant effect on people’s ability to buy a home. These factors include:
Increasing interest rates – Interest rates are slowly creeping up and they will continue to do so. A 1% rise in interest rates could add hundreds to your monthly repayments and experts predict that rates will rise by that 1% before the end of the year.
Rising FHA insurance premiums – While FHA insurance premiums don’t affect everyone, there does tend to be a flow-on effect to other insurers when the FHA rates rise. While it may only be a $50 a month increase, add that to rising interest rates and the burden starts to rise.
Tighter lending criteria – As interest rates rise, lenders will tighten their criteria for loans. Proof of your long-term ability to meet those payments will be paramount.
FHA loan reductions – Most commentators predict that FHA loan limits will drop and possibly drop considerably. This could increase the number of potential borrowers who are sitting in no man’s land, not eligible for loans at either end of the market.
Less bank stock – Virginia has a lower range of bank housing stock compared to many other states. Bank housing stock are the homes the banks have foreclosed on but not sold. These will soon flood the market and reduce home prices further. States like Virginia may not feel the effect as badly as some other states.
Put together, those factors could make buying a home in twelve months harder than it is today. If you’re in a position to buy a home in Virginia, then now may just be the optimum time to act.
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March 9th, 2011 at 5:03 pm
Thanks for the insights. I would definitely say that it is all dependent on what you find in the Williamsburg MLS. There are some great buys available right now. You just have to make sure you really analyze the listings.