To buy? Or not to buy? You may be asking yourself those questions right now.
But they aren’t the only questions you should be asking yourself when thinking about homeownership.
“Where do I think home prices are heading?”
While it is true that rising interest rates are bringing home prices down, the drop is actually the leveling off of an overheated market. And the downward trend is not expected to last.
“The majority of real estate experts are projecting home values will appreciate about 2% in 2023,” says Kaitlyn Baco, Sales Associate at ERA Justin Realty. The Home Price Expectation Survey of more than 100 economists, real estate professionals, and investment and market strategists, backs this up. It predicts home prices will continue to increase up to 4% appreciation by the year 2026.
“Where do I think mortgage rates are heading?”
The average 30 year mortgage rate is over 7% now, and most lenders agree they could continue to rise over the next three months. “While mortgage rates are expected to continue to drift higher over the coming months,” says Mark Fleming, Chief Economist at First American “much of the rapid increase in rates is likely behind us.”
And you don’t have to keep your interest rate high forever. “You marry the house, but date the rate!” says Jennifer Darby Metzger, Broker/Owner of ERA Justin Realty, “Unlike home prices, you’re not locked into a mortgage rate forever. When mortgage rates drop back down – which they always do – that’s when you swap out your mortgage and refinance a new one.”
“Why not keep renting?”
Rents are also on the rise.
“You never get your rent money back. Your landlord keeps it,” says Baco, “Whereas with a mortgage, a big chunk of your monthly payment goes to your principal, all money you make back when you sell.”
Instability in the world and higher inflation are what’s driving the rising interest rates, but rates are cyclical. They won’t stay high forever. However, home prices are expected to grow. Which is why homeownership has long been a worthwhile investment.
If you’re on the fence about whether to buy, talk out your options with an experienced real estate agent like Kaitlyn Baco by calling 201-935-7500.