Home buyers who are still on the fence should seriously consider getting in the game. This summer is shaping up to be an ideal time to buy a house in Cleveland.
Above all, buying a home is a personal decision. Buyers must consider their long-term plans, and whether or not homeownership fits into those plans. They must weigh the pros and cons of owning versus renting.
Last, but certainly not least, they must consider their financial stability as it applies to their mortgage payments.
At the same time, home buyers must look beyond themselves. They must analyze current conditions in the housing market, to see if those conditions support the decision to buy. I cannot help with the personal considerations. But I can offer this assessment of the Cleveland real estate market.
Market conditions in the Cleveland metro area are perfectly suited for buyers right now. Specifically, I am referring to (A) current mortgage rates, (B) housing affordability, and (C) market stability in both the short and long term. At present, all of these factors seem to be in favor of the home buyer.
Home Prices Suggest Market Stability
The last two releases of the Case-Shiller/S&P Home Price Index have shown rising home prices in the Cleveland real estate market. While prices are still down slightly in the year-over-year category (-1.3%), they appear to be stable and rising in the more recent months. Here are the numbers:
- Between February and March of 2012, home prices rose by 0.4% in the greater Cleveland area.
- Between March and April of 2012 (the most recent data available), home prices rose by 2.3%.
Even when you factor for seasonal changes in the housing market, prices have still risen. The seasonally adjusted (SA) numbers for March to April show an increase of 0.6%.
“Seasonally adjusted” means the data collectors have removed the influence of predictable seasonal patterns, using a statistical formula. The pattern in this case is the rise in home-buying activity going into the summer months. So perhaps the SA numbers are a more accurate indicator of the true health of the market. Either way, the numbers are positive.
Keep in mind there is a lag time with this data. We do not yet know what has happened in the Cleveland real estate market for May. If I was a home buyer in the area, I would keep an eye out for the next Case-Shiller report.
Mortgage Rates Still at Record Lows
Mortgage affordability is another key consideration for home buyers. And here, the benefits can be seen more clearly. You don’t need statistical analysis to know that rates are at record lows right now. Last week, mortgage rates hit their lowest level in the 40-year history of the Freddie Mac market survey.
Here’s a snapshot of the average rates reported by Freddie Mac on June 21:
A recent headline on the Bloomberg news website said it all: “Mortgage Rates in U.S. Fall With 30-Year at a Record-Low 3.66%.” This time last year, the 30-year mortgage was averaging 4.5%. In June of 2010, it was even higher. We can easily say that rates have never been this low, because we have to the data to support such a statement. But it’s just as plausible to say they may never be this low again.
This story is not meant to persuade home buyers into taking the plunge. I’ve never been much of a cheerleader in that department. For many people, renting still makes the most sense. This is merely an analysis of recent trends within the Cleveland real estate market. But those trends do paint the picture of a housing market that seems to be growing stronger.