Parade of Homes

Buying Now Makes Sense for Today and the Future
Debunking the myths of the housing market

It’s hard to read a newspaper or watch television without news about the national housing market. Buzzwords like subprime and bubbles are confusing, and have prompted some consumers to take a wait-and-see attitude about buying a new home. Unfortunately, that’s an attitude that could be a mistake in Kansas City.

Waiting to buy a new home could be costly in the local market. While national new-home prices have held steady or even falenl in some locations nationwide, the exact opposite is true in Kansas City. Local new-home prices are up 6 percent this year, continuing trends for higher new-home values in the region. The good news is that buying a new home here means you have a good opportunity to see your investment increase. The downside is that waiting a year means you’ll likely pay more for a new home than you would today.

A key component of affording a new-home for most consumers is the mortgage rate for their home loan. The average rate for a 30-year fixed-rate mortgage has hovered around 6.5 percent in recent weeks. While prospects are favorable for rates to remain around this level in the short-term, most projects call for rates to increase in 2008 and 2009. A rise of just one point in mortgage rates will add about $130 a month to the cost of a $200,000 mortgage – a total of $46,000 over the lifetime of the loan.

While local home builders have reduced construction in recent months to help reduce inventories, buyers have more selection right now than ever before in Kansas City. New housing choices such as lofts and condominiums from downtown to the suburbs and innovative single-family communities and home designs mean plenty of options for buyers with different budgets and lifestyles.

Of course financial benefits of buying a new home are significant considerations as well. The biggest benefits come at tax time, when you’ll likely be able to deduct your mortgage interest and property taxes and decrease your tax burden. Today’s new homes are also more than twice as energy efficient as homes built just 25 years ago, which translates into lower heating and cooling bills during Kansas City’s blazing summers and frigid winters.

Homeownership is the single largest source of wealth for most American families. Owning a home is a foundation toward a stable financial future and is one of the best investments you’ll ever make. Taking advantage of today’s housing market is a move that can pay dividends for your family for many years to come.