Buy Now or Wait?
If you’re a homeowner who’s decided your current house no longer fits your needs, or a renter with a strong desire to become a homeowner, or a real estate agent wanting to better educate your clients who may be hoping that waiting until next year could mean better market conditions to purchase a home. You will definitely want to continue reading.
To determine whether you should buy now or wait another year, you can ask yourself two simple questions:
- Where will home prices be a year from now?
- Where will mortgage rates be a year from now?
Let’s shed some light on the answers to both of these questions.
Where Will Home Prices Be a Year from Now? According to the National Association of Realtors (NAR), the median price of a home today is $396,558. According to Florida Realtors Research Department in partnership with local Realtor boards/associations, the median price is up 21.3% from the previous year. With the rising prices we’re seeing, despite fewer sales so far this year, the dollar volume of closed sales remains high. Single-family dollar volume in the first quarter of 2022 came in at $42.1 billion, an 11.5% increase over the same quarter last year, while condo-townhouse dollar volume was up 16.3%, to $16.1 billion.
Where Will Mortgage Rates Be a Year from Now? According to Fortune, on the year, the Mortgage Bankers Association forecasted the average 30-year fixed rate would climb to 4%, while Fannie Mae forecasted a 3.3% mortgage rate by year’s end. We blew past those estimates weeks ago. Whether purchasing a single family, condo, primary, investment, manufactured home, Conventional Loan, FHA Loan, etc. loan level adjustments are applied therefore reflecting much higher.
Now, real estate researchers are dialing down their home price forecasts. On Wednesday, Zillow researchers released a revised forecast, predicting that U.S. home prices would rise 14.9% between March 2022 and March 2023. That’s down 2.9 percentage points from last month, when Zillow said home prices would shoot up 17.8% over the coming year.
The Mortgage Reports Article: “Home Prices not dropping in 2022” advises to Keep in mind that mortgage interest rates, although rising, are still within affordable levels when put into a historical perspective (back in 1981, rates topped 18% for a 30-year fixed-rate mortgage). And trying to ideally time the rate market isn’t recommended.
“You can never time a market perfectly. If the home you are looking at meets you and your family’s needs and is not going to overextend your means financially, pull the trigger,” advises Casey. “The longer you wait, the more you will likely spend more money on rising rents and saving for the needed down payment.”
Sky-high housing demand isn’t going anywhere.
Many home shoppers and homeowners worry that prices have been artificially inflated over the past couple years. But rising prices have largely been driven by a supply-demand imbalance. And that dynamic isn’t going away any time soon.
According to the National Association of Realtors, there were just 870,000 homes on the market in February, with millions of shoppers vying for these properties.
“We are currently in a massive demographic wave. More millennials, the largest demographic in history, will turn 33 this year — the peak age when most buyers purchase their first home,”
All in all, experts agree that low housing inventory and high demand are here to stay for the foreseeable future. That means home prices aren’t going to drop any time soon. So, 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.
With 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. Contact me for a Cost of Waiting Analysis form for your area.