Potential buyers are always asking, “is now a good time to buy, or should I wait to purchase a home after the new year.” Tom Nickley sat down to give his two cents on the topic in hopes of giving you a better understanding of the current market.
Should I buy a home now, or should I wait?
High competition is driving the market.
The market over the last year has been unlike any market we had seen since being in the real estate business. There has been a decrease in inventory and an increase in buyers. This creates an abundance of competition to buy those homes on the market.
“In my opinion, more so than ever, today right now is the right time to buy a home, for two reasons.”
The increase in interest rates is inevitable.
Over the last two years, we have seen interest rates drop to the lowest we have ever seen. Most rates are going for, on average less than 3%. It has never been cheaper to borrow money. Low-interest rates make homes more affordable for those who need financing.
However, over time these rates will start to rise. And while we do not know exactly when this will happen, the federal government has been purchasing bonds, trillions of dollars in bonds since the beginning of the pandemic. Yesterday they announced that they would be tapering off the purchase of those bonds, and by mid-next year they will be done buying bonds. Bond purchases have been the main factor in keeping interest rates so low. Once they stop buying bonds, there will be a direct relation to the increase in interest rates.
Interest rates and the cost to borrow money directly affect how much you are paying for a home. A 1% increase in interest rates correlates to a 10% increase in your interest payment, which means you can buy 10% less affordability in the home.
To throw some actual numbers in there, check out this graphic below.
The Increase in the Prices of Homes.
In the last year, there has been a historic increase in the price of homes. In our market alone, prices have increased by 18% since this time last year. This is making consumers ask, “Are prices too high,” “Are homes overvalued.” But the general industry consensus is that values will continue to rise through the end of 2022.
“The demand for houses and the low inventory will not be solved overnight. It’s something that will continue into next year. It is a driver in the increase of the value of homes.”
Although we have seen an 18% increase over the last year, many industry experts predict that we will see a 12-14% increase in the next year. With prices & interest rates increasing over the next year, the home you could buy right now at $400,000 could be $450,000 by next year.
It is a wonderful time to buy a home, now more than ever. With the holidays coming and the end of the year, the competition typically slows down compared to the spring months. Now is a good time to lock in on the home of your dreams.
If you are considering making a move as a buyer or seller, we would love to assist you. We have 33 licensed and experienced real estate agents on our team. Give us a call at 407-904-2456 or send us an email at [email protected] to set up an appointment.