Here’s why now is a great time to purchase a home despite rising rates.
Why consider buying a home in today's market, even when interest rates are on the higher side? While some are cautiously observing from the sidelines, I've been actively investing in properties this year. Today, I’ll share why I strongly recommend that our clients do the same.
Yes, interest rates have seen an uptick, but they still hover below the 53-year historical average, currently standing at approximately 7.5%. To put it into perspective, the 53-year average for interest rates is 7.7%, so we're comfortably below that mark. Furthermore, the persistent issue of low housing inventory continues to challenge prospective buyers, whether in the present or the foreseeable future. Lately, we've successfully assisted two buyer clients in securing offers on homes, contingent on the sale of their existing properties. Such opportunities were rare not too long ago.
Affordability concerns have also deterred some buyers due to the higher interest rates. However, here's a crucial insight: industry experts are projecting a decline in interest rates over the next year, with a forecasted rate of 6% in the future to 5% by the fourth quarter of 2024.
"The present moment offers an ideal window to secure a property with reduced buyer competition."
If you make your move now, the monthly payment for a $525,000 home, covering principal and interest, would be $550 less compared to today. Waiting might yield lower interest rates, but it's important to note that home values are also anticipated to appreciate by 3% to 5%.
So, taking a conservative estimate of a 3% increase, waiting could mean shelling out an extra $15,000 for the same home a year from now. Additionally, as rates drop, more buyers will enter the market, intensifying competition. By waiting, you'll potentially face fiercer competition and higher home prices. The prudent choice is to seize the opportunity and make your purchase now, with the option to refinance down the line when rates become more favorable.
Remember, the focus should always be on finding the right home for you and your family. You can explore refinancing options when interest rates become more favorable. The present moment offers an ideal window to secure a property with reduced buyer competition. Should you require assistance or seek a local perspective on home values, please call or email me. I’m happy to help.
