In the current housing industry, it’s easy to think, “Maybe I should just wait and see what the market does,” and that’s understandable because frankly, we’re navigating uncharted waters. Between rising rates, skyrocketing home costs, and low home inventory, you’ve got a recipe for a tumultuous experience as a homebuyer. So is it better to wait for the “bubble to burst” before you start your homebuying journey, or is this market here to stay?

The Current Market

In the wake of the COVID-19 pandemic, the Federal Government bottomed out mortgage rates in order to help stimulate the economy, but that seems to have finally ended. From March to April, we saw the average mortgage rate for a 30-year fixed-rate mortgage jump over 0.5%.

We’ve also seen prices rise over the last few years. Supply and demand plays a big role in home prices. Lack of newly built homes stems all the way back to the recession of 2008, but as younger generations start to move into adulthood, we’re seeing a huge shortage with the amount of homes available for purchase. Since so few homes were built during the fallout of the recession, there just isn’t as much inventory available to sell to new homebuyers.

Another factor in rising home prices is home value appreciation, which happens naturally because of inflation. According to Zillow, home values are expected to grow 14.9% over the next year. If you already own your home, that means 14.9% more money in your pocket when you sell your home. However, it means more money being spent to purchase a home if you are planning to buy.

Market Predictions

While the housing industry’s landscape changes day-to-day, there are some factors you can count on happening that will likely affect your homebuying experience.

The reality is that the historically low rates of the last two years were just that – historical. The rising rates we see aren’t out of the norm; this is a product of the economy resetting back to pre-COVID standards. What that does mean, however, is that the rates you see today are likely the lowest you’ll see for quite a while, so if you’re trying to lock in the lowest rate possible, it does not pay to wait.

When it comes to home values, inflation will always be a factor. Home prices have steadily risen since the 1960s, so you can count on those prices only continuing to go up. Inflation has always affected the economy, but the silver lining is that with inflation, we’ll also see rising wages which means steady buying power for your new home.

Freddie Mac predicts that the demand for housing will stay steady as it has in the past couple years. Many buyers have also decided to opt for building rather than buying. Over 34% of homes on the market in December were new construction, which is a new record for housing. Hopefully this uptick in new construction homes will help level out the housing shortage in the coming years.

So… Should I Wait?

The bottom line is that homeownership is likely to only become more of an investment in your overall wealth. The advent of the COVID-19 pandemic caused a huge rift in the housing market, and we’re starting to see the fallout of the snap decisions made to protect homeowners’ investments. With both housing prices and interest rates increasing, the quicker you lock in a rate, the more money you can save each month while also building home equity.

However, buying a home is likely one of the biggest, if not the biggest, personal investments you will make in your lifetime, and that is likely to pay off no matter when you do it. Even if you weren’t ready to take advantage of the historically low rates of 2020-2021, that doesn’t mean you’ve missed out on the chance to own a home and cash in on the benefits.

Your home purchase is an investment into your future, which means you should do it when you’re ready. No matter what, market conditions will always impact your homebuying journey. The most important thing to remember is to prepare properly so you can feel comfortable making a sound decision to help you meet your goals. Whether it’s today or 5 years from now, our Flat Branch Home Loans lenders are here to help you on your journey. Let’s get you home!

Should You Wait to Buy a Home?