Two Questions to Ask Yourself If You Want to Buy a House

If you're thinking about buying a home, you're probably paying attention to everything you hear about the housing market. And you're getting your knowledge from a variety of sources: the news, social media, your real estate agent, talks with friends and loved ones, overhearing someone conversing at the local supermarket, and so on. Most certainly, property prices and mortgage rates will rise dramatically. 

To help cut through the noise and give you the information you need most, take a look at what the data says. Here are the top two questions you need to ask yourself about home prices and mortgage rates as you make your decision: 

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for that information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. 

According to the most recent release, the experts polled anticipate a small depreciation this year (see red in the graph below). But here's the most important context. The worst of the home price drops are now behind us, and prices are beginning to rise again in many cities. Not to mention, the 0.37% depreciation shown by HPES for 2023 is far from the crash that some predicted would occur.

Let us now turn our attention to the future. The green in the graph below indicates that prices have turned a corner and will rise in 2024 and beyond. The HPES predicts that after this year, home price appreciation will return to more average levels for the next several years.

So, why is this important to you? It means that your home's worth will likely rise and you will build equity in the years ahead, but only if you buy now. Based on these projections, waiting will only cost you more money in the long run.  

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. According to the most recent reports, inflation, while still high, has slowed since its peak. This is a positive indicator for the market and mortgage rates. This is why.

When inflation cools, mortgage rates generally fall in response. This may be why some experts are saying mortgage rates will pull back slightly over the next few quarters and settle somewhere between roughly 5.5 and 6% on average.

But no one, not even the experts, can predict where mortgage rates will be next year or even next month. This is because there are so many variables that might influence what happens. So, to give you a glimpse of the potential outcomes, consider the following:

  • If you buy now and mortgage rates don’t change: You made a good move since home prices are projected to grow with time, so at least you beat rising prices.
  • If you buy now and mortgage rates fall (as projected), You probably still made a good decision because you got the house before home prices appreciated more. And you can always refinance your home later on if rates are lower.
  • If you buy now and mortgage rates rise, you made a great decision because you bought before both the price of the home and the mortgage rate went up.

Bottom Line

If you're thinking about buying a property, you should be aware of the current state of housing prices and mortgage rates. While no one can predict where they will go, expert estimates can provide you with valuable information to keep you informed. Let's connect so you can get an experienced view of our local market.

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