Should I buy now or wait until rates fall? This question is plaguing current home buyers. Home prices are climbing, interest rates show no signs of cooling, and buyers are struggling to find affordable homes on the market. The result? Most buyers are choosing to wait. In fact, more than 80% of buyers believe it’s a bad time to enter the market, according to Fannie Mae Home Purchase Sentiment Index released in early September. However, there are some hidden perks and advantages to buying in the current market.
Massive earning opportunity if you buy now.
One of the benefits of purchasing when home values are on the rise is the expedited equity gains. Equity is the amount of home you own (i.e. the amount of mortgage you’ve paid off). You can gain equity by completing your monthly mortgage payments and by home value increases. So, you can spend another year or two wasting money on rent (which is also rising), or you can start building equity now and reap the rewards of rising home prices. Once rates fall and demand picks up, prices will likely climb even more, putting you way ahead of the buyers who decide to wait.
You might be waiting a while.
Mortgage rates are set to stay higher for the near future. Recently, the Fed released updated projections that revealed experts believe rates will stay higher for longer. The economy is going strong and isn’t slowing down any time soon. Though rates might start to see minor relief in 2024, it’s likely we won’t see a noticeable decrease until 2025. That’s two years of missed equity and wasted rent money. Plus, by then, it’s probable that the competition for homes will be worse.
This isn’t your ‘forever rate’.
Above all, if you’re financially ready to buy and you find a home that you love, don’t let rates get inside your head. It’s impossible to ‘time the market.’ A home is a long-term investment. A rate is a short-term commitment. You can always refinance to a lower rate later.
At the end of the day, it has to be YOUR decision about whether or not it’s the right time to buy, NOT the market’s decision. If you want to talk things through with us, we’d be happy to chat.