A high number of people may be looking to buy a house in Charlotte in the coming months, as a recent report revealed that buying is more cost-efficient than renting in many parts of the country.
In half of U.S metros, buying a home is a better financial decision than renting an apartment if people plan to stay for at least two years, according to the first quarter breakeven horizon analysis from Zillow. Charlotte's breakeven point is 2.2 years, which is one of the lowest in the U.S.
"Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it," said Zillow Chief Economist Dr. Stan Humphries. "Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas."
However, buying a house isn't always the best decision, Humphries added. It also depends on the area, as the breakeven point in Washington D.C. is 4.2 years – two years longer than that of Charlotte.
"For those renters who can't qualify for a mortgage or aren't able to save enough for a down payment on a house, renting can be a more flexible, and often far less frustrating option," he said.
Falling mortgage rates could also spur buyer activity
In addition to the fact that buying is a better financial decision in Charlotte, falling mortgage rates during peak season for the housing market could also help fuel buyer activity.
The average 30-year fixed-rate mortgage dropped to the lowest level since November 7, 2013 in the week ending May 8, according to Freddie Mac's latest Primary Mortgage Market Survey. The decrease was from 4.29 percent to 4.21 percent. Meanwhile, the average 15-year FRM slipped from 3.38 percent to 3.32 percent in the same period.
"Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter," said Frank Nothaft, vice president and chief economist at Freddie Mac. "Meanwhile, the economy added 288,000 jobs in April, the largest since January 2012, and followed an upward revision of 36,000 jobs for the prior two months. Also, the unemployment rate fell to 6.3 percent."
Adjustable-rate mortgages are affordable as well, with 1-year Treasury-indexed ARMs averaging 2.43 percent, compared to 2.45 percent on week prior. Five-year Treasury-indexed hybrid ARMs remained at 3.05 percent.
Buyers in Charlotte looking to enter the market should prepare for a lot of competition, as inventory levels are still low – despite recent growth – and the next couple of months are peak season for the housing market.
Those interested in moving forward on a local housing acquisition, or hoping to sell a house in Charlotte, can benefit by partnering with Lodestone Real Estate. The trusted agency has helped hundreds of individuals successfully navigate the path to homeownership during its years in operation.