Two Questions To Ask Yourself if You’re Considering Buying a Home
If you're thinking about purchasing a house, you're probably paying attention to everything you hear about the housing market. And you acquire your information from a variety of sources, including the news, social media, your real estate agent, talks with friends and family, overhearing someone conversing at the local grocery, and so on. Most certainly, property prices and mortgage rates will rise significantly.
Take a look at the statistics to help you cut through the noise and get the information you need. As you make your selection, here are the top two questions you should ask yourself about home pricing and mortgage rates:
1. Where Do I Think Home Prices Will Go?
Pulsenomics' Home Price Expectation study - a study of over one hundred economists, real estate specialists, investment and market strategists - is one reputable source of that information.
According to the most recent release, the experts polled predict 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 Will Go?
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 falls, mortgage rates tend to reduce as well. This could be why some analysts predict that mortgage rates will fall slightly over the following few quarters, settling somewhere between 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: If this happens, you made a great decision because you bought before both the price of the home and the mortgage
If you're considering about buying a house, you should be aware of the current state of housing prices and mortgage rates. While no one can predict where they will go, professional estimates can provide you with useful information to keep you informed. Let's get in touch so you can get an expert advice on our local market.