Over 65% of Americans own their own home, and this rate of homeownership has remained relatively stable for the past 60 years. The most recent Case-Shiller home price index revealed price rises of just over 10% in December, but despite this, the last few months have seen a significant rise in the sale of houses across the country. A combination of low interest rates, remote working, and a desire for more space has driven more people to move, and millenials and other first time home buyers have been especially eager to get on the property ladder.
Taking Advantage Of Low Mortgage Rates
Despite the recent recession, the US has experienced a booming housing market, causing prices to rise and inventory to drop. One of the reasons behind the demand for property is the low cost of borrowing. Mortgage rates dropped to an all time low of 2.65% at the beginning of the year, and buyers have been keen to make the most of the considerable savings that this low rate offers. Homes are selling fast, and buyers need to be prepared. With help from home loan experts, buyers are able to quickly get pre-approved for a loan, leaving them ready to make an offer as soon as a property becomes available.
Boosting Down Payments For First-Time Buyers
Potential homebuyers generally assume a downpayment of around 20% is necessary to purchase their next home. However, more than half of all buyers, and almost 75% of first time buyers, put down a smaller deposit. For many buyers with a smaller down payment, the benefits of getting out of rented accommodation and building up equity still outweigh the disadvantages of higher monthly loan repayments and interest rates. If a proposal for a tax credit for first time buyers comes into legislation, it could allow millions more renters to buy their own home without having to put down so much of their own money upfront. A refundable tax credit of $15,000 would be enough for the downpayment on a home in 80% of the largest metropolitan areas in the US.
Although the percentage of people owning their own home has remained steady for decades, many factors can affect the level of property transactions in any one year. The impact of the pandemic was significant in 2020, but lower rates have led to considerably more sales.
