House prices are dirt-cheap… Mortgage rates are at record lows…
And this week, the U.S. Federal Reserve committed to push mortgage rates even lower to “help support conditions in the mortgage markets.”
Banks have responded… As of this week, my local bank (Everbank) is offering 30-year mortgages below 4%. I checked LendingTree and found the same thing.
Between “printing money” and pushing mortgage rates lower, it’s clear the government wants to see the value of your house go up.
[ad#Google Adsense 336×280-IA]Everyone is scared of housing now. Housing prices have fallen by one-third, and nobody wants to get burned again.
But don’t forget… prices are dirt-cheap, rates are at record lows, and the government is trying to force the price of your house higher.
With this in mind, I strongly believe housing prices won’t go down much farther. It comes down to some basic math…
Consider this: The median existing home price in America is currently $168,000. But it might cost you roughly twice that to build one from scratch…
If you’re going to build a typical 2,500-square-foot home, at a cost of $100 per foot… it’ll cost you $250,000. And that’s just building costs… by the time you add in the cost of the lot, permitting, labor, and more, you’re up near $300,000.
You might be able to drive down the cost per foot a bit… But at $80 per foot, you’re still looking at a $200,000 building cost, plus the lot and permitting. At the very best, you might get to $225,000.
This is 33% higher than the price of an existing home.
I believe that existing home prices have plenty of room to run higher. At these mortgage rates, and these home prices, housing is more affordable than it’s ever been in America.
If you’re in a position to do it, now is the time to buy a home or refinance your existing home.
Don’t catch yourself looking backwards at what we went through… A few years ago, houses were extremely expensive, and rates were much higher.
Instead, look forward. Today, housing is cheap. Mortgage rates are now below 4%. And the government has renewed its commitment to force home prices higher.
Why fight that?
While I can’t promise you’ll make a fortune, I do believe all three of these things will take effect at some point.
If you can, consider buying or refinancing today.
— Steve Sjuggerud
Source: Daily Wealth