Record-high inflation, rising annual appreciation rates, increasing mortgage interest rates, taxes, and more – it seems like the odds of buying a home in the near term are not in the homebuyer’s favor. Despite these obstacles, you shouldn’t feel deterred in your plan to buy a home, even if it’s your first time buying one.
Is it smart to buy a house right now? Here are three reasons why you should start the home-buying process sooner rather than later.
- Mortgage rates are dropping
As of the week ending December 15 last year, mortgage rates dipped for five straight weeks, settling at an average of 6.31%. Nationwide inflation slowed down considerably in November, also causing mortgage rates to drop. This has allowed some stability in purchase demand.
Not only that, mortgage rates are expected to drop further in the following weeks. According to Homebuyer.com, borrowers may expect 5% rates soon. Meanwhile, mandated mortgage rate discounts for low- and moderate-income first-time buyers may allow those qualified to enjoy even lower rates.
As long as all your finances are in order and you’ve already done the research, it will be wise for you to take advantage of today’s lower rates and consider buying a home at the soonest time.
- Fewer homes for sale in most market
Stabilization in the number of homes for sale, coupled with lower mortgage rates, spells more demand and increased competition among home buyers. Real estate data company Altos Research reported that the inventory of homes for sale continues to drop, with the market starting off 2023 having 39% fewer homes available than at the start of 2020 before the pandemic hit. During that period, there were 782,000 homes available at the beginning of the year. That number has dwindled to 490,000 early this year.
A low housing inventory means that buyers will have to pay more because the demand for available homes will be higher. With inventory expected to remain low in the near future, putting off your home-buying plans could mean paying for even higher costs later.
- Home prices are increasing annually
Annual price growth in the real estate market overall has consistently stayed within the double-digit range for almost two years. Although prices managed to hit 9.78% in October 2022, market volatility could mean prices will trend upward again soon. Thus, by buying now, you’ll be able to lock in today’s prices before these climb up well out of your reach.
During inflation, it will be a wise move to put your money in an investment that holds or increases in value. Buying a home, even if it’s a relatively affordable one, is still a path to building wealth. And since home values will still increase notwithstanding upheavals in the economic climate, you’ll have peace of mind knowing that you are essentially building equity with each home mortgage payment. As the value of your home increases, so do your home’s net worth and future resale value.
Is it the right time to buy a house? Let me, Amir Hardy, help you find the answer to this question. Call me for a consultation today at 415.602.0570 or drop me a note here.