Why 2012 Could Be a Good Time for Families to Buy a House

Rent vs Buy Infographic 2011: Choose the Best Real Estate Investment
Be shrewd about whether or not your family should buy a house.

There are many reasons why renting makes sense and you should consider those reasons objectively. However, home ownership can also be a wise decision and if buying a house will benefit your family, 2012 might be the year you want to think about buying.

A Record Number of Families can Afford a Mortgage

According to Kiplinger, the percent of family income consumed by a mortgage payment is at record lows. The average family pays only 12% of their monthly income to pay for today’s mortgage. It hasn’t been that low since 1971. Additionally, the Fed’s financial obligations ratio for mortgage holders have fallen to levels not seen since 2003.

The Costs of Buying a House Hasn’t Been this Affordable in Decades

Not only can more families afford a home, costs of purchasing a home are at record lows. This fall home buyers have seen record lows in mortgage interest rates. The National Association of Realtors Housing Affordability Index hit a near record last August with an index of 183.7.

Rent Costs are Inflating Rapidly

Thanks to a sluggish economy, there is not a large growth of new apartment complexes. Yet, more and more people are choosing to rent instead of own. Occupancy for apartments is at a national high and when supply remains fixed while demand increases, prices will rise. That’s exactly what renters have seen. PR Newswire estimates that rents are up 4.5% this year and expected to climb another 3% next year. Rising rent and falling home prices/mortgage costs have pushed the ratio of home prices to yearly rents to a low of 11.3; only slightly above the 1989-2003 average of 10.

Economic Reasons Why You Shouldn’t Buy in 2012

Let me temper all this positive news for potential home buyers with some pessimism. While there are strong indications of a good buyers market, there are also many potential roadblocks for families looking to buy. Most of them have to do with uncertainty in the market place.

Buying a home is never an easy decision to make, but since the housing bubble burst, there are a number of positive signs in the marketplace that 2012 could be a good year for families to purchase a house.

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