Could Waiting to Buy a Home Cost You More?
May 14, 2021
Is now the right time to buy your next home? Do you wonder if you should wait due to the fast moving, high priced housing market? Like so many others you might be on the fence about buying a home right now. A vast number of renters who want to be homeowners as well as homeowners wanting to upsize are struggling to decide if now is the right time to purchase or not. The two main questions you need to consider when trying to decide whether to purchase or not are: Will home values be higher next year than they currently are? And, will the interest rates still be as low next year as they are right now?
Well, I am glad you asked. Let’s talk about the answers to these two questions and see if I can give you my view and my professional opinion. Based on everything I have seen and researched about housing prices and projections for the coming year, I can say that YES, house values will continue to rise and be even higher next year. According to Keeping Current Matters, all of the major real estate industry forecasters are projecting home values to rise an average of a little over 7% from this year to next. To put it simply, a home that might cost you $325,000 this year is likely going to cost you around $350,000 next year. Meaning you would have to come up with about an extra $2,000 more for the downpayment and you would be financing about an extra $22,000 on that loan.
What about mortgage rates, you ask? Well that is one thing that does change daily so while I can’t guarantee that mortgage rates will be what is being predicted by the experts, I can tell you they are at a historic low right now! The average mortgage rate right now is about 3%. Most experts say that as the economy begins to recover and more people get vaccinated and we get lives back to normal these rates will begin to rise. This will in turn also raise the purchaser’s cost in the end. While it doesn’t seem like much in theory, the experts are saying these rates could jump up .5% - .9% in the early part of 2022.
So what does this mean for the equity in the home you are wanting to purchase? With all of that information we have learned above about the values of homes continuing to increase coupled with interest rates projected to be higher in 2022, a buyer next year will likely pay more in mortgage payments than a buyer would for a similar property this year. It may not be much more month to month, but when you think about that amount over the course of the life of the loan, plus the amount of “guaranteed” equity because of housing appreciation, the total net worth a buyer could gain by buying this year is a small fortune.
The bottom line is this, it may seem scary to purchase a new home this year but from a financial standpoint, now is a great time to invest in your future by purchasing the home you love. With the rising values in the housing market your investment will not be for nothing, plus as we have all learned in the last two years, we all have a new appreciation and value for the place we call home.
If you are looking to buy or sell a home in the metro-mountain area, contact me today and let me help you in this investment, home-buying journey. Real estate is my profession, but people are my business!