Rising interest rates and a cooling market has some buyers getting cold feet, wanting to put on the brakes in their home buying process. They think they should “wait out” the market. Here is why waiting could cost you money in the long run.
The 2 Thoughts That Could Cost Buyers Money
1. ‘I’m Going to Wait for Lower Interest Rates.’
If the pandemic got you started thinking about buying a home, then it makes sense that the recent “spike” in interest rates may have you hitting the pause button. You may not realize that the global economic collapse of the mid 2000s and subsequent global pandemic of the past 2 years have forced the Fed to keep the economy alive by slashing rates to all time historic lows. But here’s the truth, since 1971 the average mortgage interest rate has been almost 8%, reaching as high as over 16% in the early 80s.
According to Inman News, with a more normalized economy, “rates will head upward and most likely return to historic averages over the next few years. Bottom line: Those who are waiting for a return of rates such as we have seen the past few years might end up waiting decades.”
Decades! Or for another global disaster! Ugh! No thanks. Let’s explore your options for buying NOW!
2. ‘I’m Going to Wait for Prices to Come Down.’
Seems logical on the surface. But is waiting really the smart thing to do? Not necessarily.
To begin with, home prices HAVE fallen since their peek in March of 2022. Almost 20% countywide! However, it is projected that, due to our continued lack of inventory, the declines will not be significant enough to offset the projected increases in interest rates. And in our highly desirable area, home prices will probably not stay low for long.
So, consider this:
1. Affordability is not determined by the purchase price of any home, but the amount of the monthly mortgage payment. If you are comfortable with the payment, then you can afford the home.
2. For most people, owning a home is the single largest contributor to their wealth. Over time, most people who own a home will see an increase in their wealth. They have tax advantages that renters don’t have, and of course they have equity that builds in their home over time. Compare that to those who rent, due to rent increases and no tax advantages, they will see their net worth decrease.
There’s a lot to consider when purchasing a home. If you have questions about the market, about the process, or even need help determining if home ownership is right for you, please reach out to me. I would love to help!
I believe that with Information, Preparation, and Strategy, you can achieve great success. Let me show you how!
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