2019 was pretty much a seller’s market, and the economy is remaining strong. New housing construction is slowly increasing, and mortgage rates have come back down. It seems the benefits of buying a home are clear, but you may be worried the unknown negatives that may pop up next year. So how do you get off the horns of this dilemma? To help you out, here are some good reasons why buying a home in Northwest Arkansas should be your New Year’s resolution in 2020.
Mortgage Rates Will Likely Keep Steady
Mortgage rates are lower right now than they were at the beginning of 2019. But for how long? Predictions by those with their finger on the financial pulse predict that the rates could stay low for the near term. So buying a home in 2020 will be a wise move in order to beat further increases and save money over the long haul.
According to the Home Buying Institute, here’s the movement in mortgage rates: “Real estate predictions for 2020 suggest we could see more of the same next year, in terms of home sales and price growth. A similar “status quo” forecast has been issued for mortgage rates.” The question for prospective home buyers is what will happen to those rates in the future.
What this means for anyone interested in buying a home in Northwest Arkansas is that the time to buy is now – before rates get any higher. Also, because mortgage rates will continue to be steady, sales will likely continue, which in turn means more inventory will be sold through and the seller’s market could continue. This will bring rising prices, so waiting longer won’t be a good idea.
Lending Standards Will Stay Relaxed
Another solid reason why buying a home in Northwest Arkansas should be your new year’s resolution in 2020 is that lending standards have become less stringent than they have been for the past few years.
First, Freddie Mac and Fannie Mae have been using less strict criteria for purchasing loans from lenders, permitting higher debt-to-income ratios and higher loan-to-value ratios. What this means for people buying a home in Northwest Arkansas in 2020 is that, generally, they can qualify for a loan while carrying greater household debt and with a lower down payment. This is opening up the idea of homeownership to a whole new market of people who weren’t able to purchase a home in the past.
This trend is in full swing right now, as evidenced by the decline in mortgage denial rates. So if buying a home in Northwest Arkansas is your goal and you’ve had doubts about qualifying for a mortgage, 2020 just may be your year.
Home Prices Will Continue to Rise
With the current situation regarding supply and demand, the outlook for home prices is that they will continue to climb throughout 2020 . . . and beyond. Many top forecasters believe that the best course for home buyers is to act now before prices get even higher.
Statistics from Zillow show that in the US median home prices rose by a little over 4.8% over the course of 2019. And predictions are that prices will increase by another 2.8% into 2020. Although this trend isn’t uniform across all areas and all markets, it is nevertheless a strong trend that suggests home buyers will be facing higher prices if they wait too long. If you have considered buying a home in Northwest Arkansas, the time to act is now!
Our local market will likely see higher prices than the national trend due to continued increases in population and a potential shrinking of New Construction inventory. Many of the local home builders have run into land & development shortages, especially in the lower price ranges. That decrease in supply and increase in demand will bring higher prices to Bentonville and NWA.
Perennial Tax Benefits
And then there are the always pleasant tax benefits, which certainly apply to buying a home in Northwest Arkansas in 2020. These benefits include:
PROPERTY TAX DEDUCTION
Property taxes can’t be avoided, but with this deduction, you can get some money back at tax time. The average American household pays a little more than $2,000 in yearly property taxes, and the more you pay, the more you can deduct. This can help you offset many other costs of homeownership.
MORTGAGE INTEREST DEDUCTION
This can be a fairly significant tax break in the early stages of mortgage payment when the bulk of each payment goes toward interest rather than the principal. Don’t forget to include this when filing your taxes.
HOME OFFICE DEDUCTION
For the freelancers, self-employed, and others who work from home, the IRS allows you to write off a portion of your home office expenses, things such as heating and lighting costs, water, and Internet and phone. Utilizing these deductions can make a huge difference in your finances.
So are there good reasons why buying a home in Northwest Arkansas should be your new year’s resolution in 2020? The answer seems to be a resounding “Yes!” These reasons include steady mortgage rates, home prices that will continue to rise beyond 2020, the more relaxed mortgage lending standards, and the definite tax benefits. Now is an excellent time to buy real estate in Northwest Arkansas and beyond!