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Pros and Cons of Buying a House in 2021

1st March 2021 Print

Buying a home amidst the pandemic can add extra anxiety to the already stressful situation of moving and purchasing a property. Whether you’re buying a home to live in yourself, retain an income, or flip, there’s a big decision to make here. To make this decision a little easier, we’ve collected information on any challenges or positives you’ll face on the homebuying front.

Mortgage Rates are Still Low

Looking at the most recent mortgage rates, we can see that they’re favorable across the board. Even with the small uptick that occurred at the end of 2020, mortgage rates remain at historic lows, with an average 30-year loan staying at 2.81-2.839%. A 15-year loan has an even more affordable rate at 2.296%. 

If you are optimistic you can sustain a 15-year loan, now is the time to do it. 15-year loan periods are great for investors that want to flip a home or rent them out. A 30-year loan would work great for a family who wants to earn capital or live permanently in that residence. Some banks will offer a 20-year loan at around 2.6% if you want a happy medium between both periods.

Limited Homes on the Market

Due to the pandemic, many homeowners aren’t putting their properties up for sale as most will have to sell them at cost or lower. This can pose a problem for buyers looking to flip, invest, or move. As of December 2020, there were only 1.07 million homes for sale in the United States, accounting for an almost 25% decline since 2019.

Choosing to sell in this market is more fruitful than homeowners expected. With the limited amount of homes for sale, buyers are seeing as little as a 21 day turnover between seeking the help of a realtor and signing their homes over. Plus, homes are selling for more than they ever have been at an average of approximately $266,104. That’s an 8.4% increase from last year.

Pros and Cons of Buying a Home in 2021

Your financial situation is the most crucial indicator of whether you should buy a home during the pandemic. If you are currently employed, it’s likely your income stream is locked in as 2021 is projected to see a dip in COVID-19 cases and a return to normalcy. 

Pro: Buying an Income Property

Buying an income property at this time will add to your investment portfolio and provide affordable housing for those in need during the pandemic. With the massive demand for apartments and housing, you’ll have little issue finding tenants. Plus, you’ll be able to cash in on some passive income which will lead to more property and portfolio growth.

The only issue you’ll run into is actually purchasing the property as apartment buildings, triplexes, and sectioned-off homes tend to go quickly.

Pro or Con: Buying a Home to Flip

Flippers rejoice because you’ll have an easier time selling your property after renovations are finished. You’ll also be more successful at locating cost-effective materials and tradespeople for this task as both industries are looking for work. 

Your investment could run into a few issues if your home is too far from many local businesses, as transporting supplies will become more expensive than usual. You could also lose a significant amount of money once the housing market starts up again and competition becomes fierce. Try to flip the home as quickly as possible to see the most returns.

Con or Pro: Buying a Home to Live In

Buying your first home in 2021 will cost you more money than usual, and your down payment may not be enough for the home size you’re expecting. You could also pose a safety risk to your family by moving. However, if you’re selling a home and buying a new one, the risk won’t be as severe as you’ll receive that capital to cushion you.

Mortgage rates are very low, so you’ll pay less for your home in interest over the years. Consider your financial situation carefully before purchasing a home in 2021.

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