Why Rising Mortgage Rates Push Buyers off the Fence
If you’re thinking about buying a home, you’ve probably heard mortgage rates are rising and have wondered what that means for you. Since mortgage rates have increased over two percentage points this year, it’s natural to think about how this will impact your homeownership plans.Today, buyers are reacting in one of two ways: they’re either making the decision to buy now before rates climb higher or they’re waiting it out in hopes rates will fall. Let’s look at some context that can help you understand why so many buyers are jumping off the fence and into action rather than waiting to buy.A Look Back: How the Current Mortgage Rate Compares to Historical DataOne factor that could help you make your decision to buy now is how today’s mortgage rates compare to historical data. While higher than the average 30-year fixed rate in recent years, the latest rates are still comparatively low when you look at the bigger picture of where rates have been since 1971 (see graph below):Mark Fleming, Chief Economist at First American, explains it like this:“. . . historical context is important. An average 30-year, fixed mortgage rate of 5.5 percent is still well below the historical average of nearly 8 percent.”If you’re deciding whether to buy now or wait, this is important context to have. Today’s mortgage rate still gives you a window of opportunity to lock in a rate that’s comparatively lower than decades past.A Look Ahead: What Happens if Rates Climb FurtherThe buyers who are springing into action now are also motivated to make their move because they know rates have risen steadily this year, and they’re eager to get ahead of any further increases.Why? When mortgage rates climb, they impact the monthly mortgage payment you’ll have on the home you’re buying. Basically, it’ll likely cost you more to buy a home if you wait. Experts say mortgage rates will rise (although more moderately) in the months ahead. Odeta Kushi, Deputy Chief Economist at First American, explains:“. . . ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”So, if you’re ready and financially able to buy now, it may make more sense to get off the fence and make your purchase sooner rather than later. As Nadia Evangelou, Senior Economist at the National Association of Realtors (NAR), says:“With even higher interest rates on the horizon, I don’t see any reason to hold off from purchasing a home right now. If you feel financially secure, you should start looking for a home.”At the end of the day, there is no perfect advice on when to buy a home. What you should do depends on your goals, your finances, and your personal situation. Use this information with the help of local real estate professionals to make an informed decision on what’s best for you. The Mortgage Reports sums it up best:“. . . if you’re on the fence about whether to buy now or wait for a better deal, buying sooner rather than later might be wise. That said, home buying is always a personal decision. Whether you should buy in 2022 depends on your financial situation and the local housing market where you live.”Bottom LineFor many buyers, rising mortgage rates are motivating them to act now and make a purchase before rates rise higher. To decide what move is best for you, let’s connect so you have expert advice on your side.
20 Reasons to Hire US to sell YOUR Home
As a team of professional Agents and Brokers, we advocate for you during the entire home selling process. We take time to uncover your goals, objectives, and concerns. Research homes in the area and prepare a competitive market analysis. Provide comps and suggestions on the asking price. Help with decluttering while advising on home repairs or upgrades. Hire a professional real estate photographer. Craft a thoughtful, compelling property description. Place your home on the agent-only database (MLS) and hundreds of public real estate sites like Zillow. After the home is listed, we market the property by providing signage and using print and digital marketing strategies. Host open houses at your request. Manage and coordinate all showing requests with your schedule. Qualify any potential buyers. Negotiate offers on your behalf with buyer agents. Assist with various financial aspects of the home sale. Once the home is under contract we provide oversight and follow-up related to property inspections and repairs. Assist with gathering essential property documents. Manage all dates and deadlines related to the contract. Monitor buyer’s loan status leading up to closing. Work directly with the title company to ensure the accuracy of all closing procedures. Present at closing to ensure all your interests are protected. Our role is to take on as many things as possible so that you have less on your shoulders when it's time to move! If you have any questions about the process or need our help with anything, please don't hesitate to ask!
The Future of Home Price Appreciation and What It Means for You
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American, tweeted just last week on this issue:“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. It forecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:2022: 9%2023: 4.74%2024: 3.67%2025: 3.41%2026: 3.57%Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.What Does This Mean for You as a Buyer?With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):Bottom LineIf you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
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