Thinking Of Buying A House? Here Are 2 Questions You Should Ask!

I know that buying a home in the crazy real estate market we have been having over the past few years is tough!  And, if buying a home has been on your to-do list, you are probably reading everything you can on social media and watching the news - and feeling like you will never be able to buy your home!  Interest rates we haven't seen in many many years; home prices that just keep going up and up!

So if buying a home is on your list, there are 2 questions you should ask yourself before you make the decision as to whether or not to buy!

WHERE ARE HOME PRICES ARE HEADING?

Every year there is a company called Pulsenomics that does a survey of real estate experts, bankers, etc. and they put out something called the Estimated Home Price Expectation Survey!  What do the experts think?  The consensus they have is prices for 2023 are expected to increase by 3.3%!  This, of course, is a nationwide expectation, but in the Richmond area, we have continued to see prices increase (in January 2023, the median sales price in the Richmond metro area was $345,000 - in August 2023, the median sales price for the Richmond metro area was $390,000).  According to the survey, these experts expect appreciation to continue - for 2024 they feel that prices will increase 1.34% and in 2025 they feel prices will increase 3.24%.  What does this mean?  It means that prices will still increase - but at more normal levels than we have been seeing!

SO WHERE ARE MORTGAGE RATES GOING?

For everyone purchasing a home, the rising interest rates have been a huge concern!  I know that rates have risen quickly over the last few years.  I took a look at the Federal Reserve of St. Louis website, which shows an interesting history of the mortgage rates since 1971 - in 1971 the average interest rate on a house was 7.33%, in 1981 it hit 18.44%.  However, in 2020 it was 3.47%, in 2022 it was 5%, and in 2023 it was 7.18%.  Going up almost 4% in a matter of 3 years does lead to sticker shock!  But when inflation cools, we should see rates start to fall in response.  So experts from Fannie Mae, Mortgage Bankers Association and National Association of Realtors have made predictions on where they think the interest rates will fall.  The average of these 3 sources seem to feel that by Quarter 2 of 2024, interest rates will be somewhere between 5.5% and 6%.

SO WHAT SHOULD YOU CONSIDER?

Experts are not fortune tellers, and they cannot be absolutely certain where the rates will end up at, because there are a lot of things that can impact prices as well as mortgage rates.  But consider this when thinking about buying a house ---

• If you buy now and rates don't change - you made a good move because prices are expected to rise, so you at least beat rising prices!
• If you buy now and rates fall as projected - you made a good decision to buy because you got the home before prices went up and you can refinance to a lower rate.  And if you had to get mortgage insurance, it is possible that when you refinance, you have now built up enough equity in the house to get rid of the mortgage insurance you pay each month!
• If you buy now and rates rise - you made a good decision because you bought before prices AND mortgage rates rose!

As you can see, buying a home now can be a good decision!  So if you are thinking of buying a home, let's sit down and talk!  I am happy to answer any questions you may have!