Considering Buying a Home? Consider the Following Questions

If you are thinking about buying a home this year, you are probably paying more attention to the housing market than usual. And you get your information from a variety of sources, including the news, social media, your real estate agent, conversations with friends and loved ones, and so on. Most likely, home prices and mortgage rates will rise significantly.

Here are the top two questions you should ask yourself as you make your decision, along with the data that will help you cut through the noise.

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists.

According to the most recent release, the experts are projecting home prices will continue to rise at least through 2028 (see the graph below):

So, why is this important to you? While the percentage of appreciation may not be as high as in recent years, what is important to note is that this survey predicts that prices will rise, not fall, for at least the next five years.

And rising home prices, even if at a slower rate, are good news not only for the market, but also for you. It means that if you buy now, your home will most likely increase in value, and you will gain home equity in the years ahead. However, if you wait, the home will only cost you more in the long run, according to these projections. 

2. Where Do I Think Mortgage Rates Are Heading?

Mortgage rates have risen in response to economic uncertainty, inflation, and other factors over the last year. But there’s an encouraging sign for the market and mortgage rates. Inflation is slowing, which is important if you are looking to buy a home.

When inflation falls, mortgage rates tend to fall as well. That is exactly what we have witnessed in recent weeks. And, now that the Federal Reserve has indicated that it will pause its Federal Funds Rate increases and may even cut rates in 2024, experts are even more confident that mortgage rates will fall. 

Danielle Hale, Chief Economist at Realtor.com, explains:

“. . . mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer. . . . a key factor in starting to provide affordability relief to homebuyers.”

As an article from the National Association of Realtors (NAR) says:

“Mortgage rates likely have peaked and are now falling from their recent high of nearly 8%. . . . This likely will improve housing affordability and entice more home buyers to return to the market . . .”

Nobody knows for certain where mortgage rates will go from here. However, the recent decline and the Federal Reserve's recent decision to halt rate increases indicate that there is hope on the horizon. While there may be some volatility, affordability should improve as interest rates continue to fall.  

Bottom Line

If you are thinking about purchasing a home, you should know what to expect in terms of home prices and mortgage rates. While no one can predict where they will go, having up-to-date information can help you make an informed decision. Let us keep in touch so you know what is going on and why this is such great news for you.

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