Home prices continue to make all-time highs. Should you be concerned about purchasing a home at current prices?

I believe that if homeownership is a goal of yours, then you should consider buying now. The probability that home prices will drop significantly is very low. 

Just take a look at the chart below. The growth trajectory has remained in an uptrend for the past five years. I expect this upward trend to continue in Atlanta in 2021. 

Atlanta sales price growth

Below I outline four reasons why now is an excellent time to buy.  

The benefit of lower rates over time

Interest rates have been hovering at all-time lows. I’ve written before that locking in low-interest rates can have a massive impact on cost savings over time. These savings can more than offset premiums paid for higher home prices right now. 

Even more importantly, if home prices fall, that will most likely mean that interest rates have increased. So again, you may realize some upfront savings, but you’ll be paying more over time.

One caveat, generally you’ll want to have a longer time horizon for staying in your home if you’re going to realize significant savings from lower interest rates (5 plus years).

A hot covid trend that will stick (having your own space)

Homeownership continues to rise in the US. As of Q3 2020, homeownership was at 67.4%, according to the federal reserve bank of St. Louis. This rate is nearing all-time highs that have not been seen since 2004. 

The pandemic has accelerated this trend as personal space becomes increasingly important. I anticipate that this will continue to be important to people in 2021, and I expect us to reach all-time highs in homeownership this year.

All-time highs mean that inventory will continue to be stressed, keeping prices in an upward trend.

Urban will make a strong comeback.

I’ve seen many trend reports showing that there’s migration from urban to suburban. From my experience buying and selling intown Atlanta, I have not seen the trend materialize. 

I believe we will see more urban demand as the pandemic wanes and the pent up demand releases for dining, shows, and all the other amenities that urban living has to offer.

The first half of this year is an excellent time to buy in urban Atlanta as I anticipate that as the economy reopens in the back half of the year, urban demand will skyrocket.

Rents are increasing again.

Rent prices have been slowly ticking back up from last October’s lows. I expect rental prices to continue to recover. 

Higher rental prices mean that affordable interest rates become more appealing for long and short term savings. Monthly mortgage payments can be much more competitive and favorable than monthly rent payments in 2021.

As I mentioned, if you plan on living in Atlanta for the next 5+ years, buying may be a better option than renting from a cost-saving perspective.

Are you considering buying or selling in Atlanta? I can help you navigate the current market conditions. Contact me here.