Is Now the Time to Buy a Home In Reno, Nevada?

 

According to the latest Fannie Mae “Monthly National Housing Survey”, 66% of the respondents said they would purchase their next residence if they were to move. In the same survey, 44% believe that house rents will increase 3.9% over the next 12 months. This could explain the high percentage considering purchasing a home.

Why is Now a Great Time to Buy? 

Price: 

The 2011 median home price in Reno is $161,000. This is down from $355,000 in 2005. You can own a home in some of Reno’s most popular neighborhoods for less than 50% of what the home would have cost you just 5 years ago.
Low Interest Rates: 

Current interest rates are still at historical lows. The average interest rate today is 2% less than in 2006. Lets compare the cost of the 2006 median priced Reno home with the median priced Reno home today.

For the exercise, we will compare a 30-year conforming fixed rate mortgage with the buyer putting 20% down. The 20% down payment in 2006 would have been $71,000. Today, 20% would be only $32,200, or a difference of $38,800.

In 2006, the interest rate with good credit was about 6.75% vs. about 4.75% today. The monthly principle and interest payment on the median priced home has dropped from $1,842 in 2006 to $672 today. What can you do with $1,170? 

Factoring in taxes and homeowners insurance, your monthly payment will still be considerably less than the cost of renting a similar home.

Low Down-Payment Government Insured Loans:

If you are concerned about the down-payment,  a FHA mortgage requires only 3.5% down. Your down-payment can be a gift from a family member, employer, are a “not for profit” charity. If you are a qualified Veteran, the Veterans Administration loan guarantee will allow 100% financing.

 

 

Tax Deduction

The IRS allows you to deduct the interest you pay on your mortgage from your federal income taxes. Due to the tax deduction, owning is often less expensive than renting.

Pride of Ownership: 

Owning your own home allows you to express yourself. You can remodel your kitchen, add a deck, choose the colors you want, or create your dream backyard.
A Better Home: 

Investors are looking for cash flow and a return on their investment rather than the nicest home. When you rent, you settle. If you want to live in a better neighborhood, you are better off buying.

Inflation Protection: 

Have you been to the gas pump or supermarket lately? How much has your grocery bill increased over the past 12 months? According to Hotpads.com “Rental prices across the US increased 11.6% in 2010, growing from a national average of $1,181 in January 2010 to $1,319 by December. The steady increase in rental prices was inversely matched by falling prices of homes for sale, which saw a 9.8% drop over the same period.” When you own a home, your housing payment will remain the same until you move or pay off the home.

Home Ownership is Risk Capital: 

I realize many are pointing to the past 5 years to question the wisdom of home ownership. Although I cannot predict when the market will turn around, I can say with certainty, it will! When the economy finally turns, you will realize a financial benefit.

Build Equity: 

Each month, a percentage of your mortgage payment goes toward principle. It is like putting money in a savings account or the stock market each month.

Large Selection: 

First Centennial Title Company’s most recent market report lists over 3,200 homes currently for sale in Washoe County. It is a buyer’s market and it is rare to see a purchase contract where the seller didn’t contribute at least 3% to the buyers traditional recurring and non-recurring closing costs.

Population Growth: 

Nevada has a very favorable tax system. I read recently that California is looking at charging sales tax on Internet sales. Internet companies will soon be fleeing California to states like Nevada and Arizona where the tax system is more favorable. Their employees will need a place to live.

The first step in purchasing a home is being pre-approved for a mortgage. If you would like to learn about the differnet mortgage options and find out what price home you qualify for, please call Doug Kaller @ 775-250-4421 or click on the “Qualify Now” tab at the top of the page. There has never been a better time to buy a home in my lifetime. If you’ve dreamed of owning a home, don’t let this opportunity pass you by.

 

 

 

 

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