You don’t have to look very hard to find a mountain of articles about today’s real estate market offering all kinds of advice and information on buying, selling, interest rates, trends, forecasts and everything in between. Trying to make sense of it all can be a challenge, even for the savviest consumers. When you consider that real estate buying/selling is one of the largest financial transactions that you will likely make, you don’t want to go it alone. Given the frenzied pace at which homes are moving in and out of the marketplace and the nuances surrounding many of these deals, it is more important than ever to be armed with information and advice you can trust. That is why we decided to talk with one of our mortgage experts to get the real scoop on whether it still makes sense to buy a new home despite rising real estate costs and growing interest rates or hold tight and see what 2023 brings. And the short answer is “yes,” if you are financially ready, buying a house – even in this market – is still worth it. In fact, most experts largely agree that buying and owning a home remains a smarter financial move than renting for most. So, if you have been on the fence about purchasing a home in 2022, here are some things to consider.
- You cannot time the market: You may hear some homebuyers say they worry that prices have been artificially inflated over the past couple of years and that they are going to wait out the market and re-enter when they come back down. Based on current conditions, they may be waiting a long time. So if you are trying to time the market, don’t! At the end of the day, it is not a matter of finding the absolute, perfect time to buy a house; it is about settling on the right time to buy for you specifically. And when you are ready – have a steady source of income, finances are in order, have your credit in check and have your down payment ready – most experts agree purchasing a home now makes more sense than taking a wait and see approach.
- Demand outweighs supply: As more millennials than ever before reach the peak age that many buyers purchase their first home, and baby boomers continue to stay in their homes longer, demand will continue to exceed supply, driving home prices even higher. These shifting demographics not only mean higher prices but also increased competition. And with more buyers vying for fewer houses, it is not uncommon to see homes selling before they hit the market, over the asking price, with no contingencies and all-cash offers. While this may push some buyers out of the market, waiting for demand to level off will likely end up costing you more in the long run. So if you are ready, the sooner you buy in, the better.
- Interest rates are rising: Typically, when interest rates go up, demand for housing goes down. This means more inventory and better pricing. After all, higher financing costs have traditionally helped cool down hot markets. Fortunately, or unfortunately, depending on which side you are on, this market has seen the opposite happen. With the Fed’s goal of getting inflation under control, interest rates are expected to continue their upward trajectory. While they are still relatively low from a historical perspective, this has many homebuyers stepping up their efforts to secure a loan before rates and prices go even higher, taking an even bigger bite out of their bank account.
- Homes continue to appreciate: One of the chief benefits of owning a home is that over time, increased home equity can add to your net worth and give you a low-cost source of cash, as needed. The ability to build equity is what sets homeownership apart from renting. Not to mention, it is not just home prices that have sky-rocketed; rent prices have gone up significantly as well. Continuing to pay a high rent with no return on investment while you wait for a lower price on a home doesn’t make good financial sense. Buyers who purchase a home today are still likely to experience rising property values and increased home equity despite higher home prices and growing interest rates.
If you have been unsure about current market conditions, you are not alone. With so much conflicting information out there, it is hard to know what to believe. While no expert can predict with certainty how the real estate market will continue to evolve, most agree there are compelling reasons to purchase a home now. So if you are ready for homeownership and can financially handle the process, there is no reason to wait – in fact, waiting may end up costing you more. Contact a loan officer at Sanctuary Home Mortgage to help you navigate today’s buying process and help you secure the home of your dreams.
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