Archives for September 2021
Two Reasons Why Waiting a Year To Buy Could Cost You
If youâ€™re a renter with a desire to become a homeowner, or a homeowner whoâ€™s decided your current house no longer fits your needs, you may be hoping that waiting a year might mean better market conditions to purchase a home.
To determine if you should buy now or wait, you need to ask yourself two simple questions:
- What will home prices be like in 2022?
- Where will mortgage rates be by the end of 2022?
Letâ€™s shed some light on the answers to both of these questions.
What will home prices be like in 2022?
Three major housing industry entities project continued home price appreciation for 2022. Here are their forecasts:
Using the average of the three projections (6.27%), a home that sells for $350,000 today would be valued at $371,945 by the end of next year. That means, if you delay, it could cost you more. As a prospective buyer, you could pay an additional $21,945 if you wait.
Where will mortgage rates be by the end of 2022?
Today, the 30-year fixed mortgage rate is hovering near historic lows. However, most experts believe rates will rise as the economy continues to recover. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:
That averages out to 3.7% if you include all three forecasts, and itâ€™s nearly a full percentage point higher than todayâ€™s rates. Any increase in mortgage rates will increase your cost.
What does it mean for you if both home values and mortgage rates rise?
Youâ€™ll pay more in mortgage payments each month if both variables increase. Letâ€™s assume you purchase a $350,000 home this year with a 30-year fixed-rate loan at 2.86% after making a 10% down payment. According to the mortgage calculator from Smart Asset, your monthly mortgage payment (including principal and interest payments, and estimated home insurance, taxes in your area, and other fees) would be approximately $1,899.
That same home could cost $371,945 by the end of 2022, and the mortgage rate could be 3.7% (based on the industry forecasts mentioned above). Your monthly mortgage payment, after putting down 10%, would increase to $2,166.
The difference in your monthly mortgage payment would be $267. Thatâ€™s $3,204 more per year and $96,120 over the life of the loan.
If you consider that purchasing now will also let you take advantage of the equity youâ€™ll build up over the next calendar year, which is approximately $22,000 for a house with a similar value, then the total net worth increase you could gain from buying this year is over $118,000.
When asking if you should buy a home, you probably think of the non-financial benefits of owning a home as a driving motivator. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.
If you’re trying to decide when to sell your house, there may not be a better time to list than right now. The ultimate sellers’ market we’re in today won’t last forever. If youâ€™re thinking of making a move, here are four reasons to put your house up for sale sooner rather than later.
1. Your House Will Likely Sell Quickly
According to the Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly â€“ on average, they’re selling in just 17 days. As a seller, that’s great news for you.
Average days on market is a strong indicator of buyer demand. And if homes are selling quickly, buyers have to be more decisive and act fast to submit their offer before other buyers swoop in.
2. Buyers Are Willing To Compete for Your House
In addition to selling quickly, homes are receiving multiple offers. That same survey shows sellers are seeing an average of 4.5 offers, and theyâ€™re competitive ones. The graph below shows how the average number of offers right now compares to previous years:Buyers today know bidding wars are a likely outcome, and they’re coming prepared with their best offer in hand. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.
3. When Supply Is Low, Your House Is in the Spotlight
One of the most significant challenges for motivated buyers is the current inventory of homes for sale. Though itâ€™s improving, it remains at near-record lows. The chart below shows how todayâ€™s low inventory stacks up against recent years. The lighter the blue is in the chart, the lower the housing supply.If youâ€™re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.
4. If Youâ€™re Thinking of Moving Up, Now May Be the Time
If your current home no longer meets your needs, it may be the perfect time to make a move. Today, homeowners are gaining a significant amount of wealth through growing equity. You can leverage that equity, plus current low mortgage rates, to power your move now. But these near-historic low rates wonâ€™t last forever.
Experts forecast interest rates will rise. In their forecast, Freddie Mac says:
â€œWhile we forecast rates to increase gradually later in the year, we don’t expect to see a rapid increase. At the end of the year, we forecast 30-year rates will be around 3.4%, rising to 3.8% by the fourth quarter of 2022.â€
When rates rise, even modestly, itâ€™ll impact your monthly payment and by extension your purchasing power.
Don’t delay. The combination of housing supply challenges, low mortgage rates, and extremely motivated buyers gives sellers a unique opportunity this season. If youâ€™re thinking about making a move, let’s chat about why it makes sense to list your house now.
- Pricing your house right takes market experience and expertise.
- To find the best list price, your agent balances current market demand, values of homes in your neighborhood, where prices are headed, and your homeâ€™s condition.
- If youâ€™re ready to sell, donâ€™t guess on the price. Letâ€™s connect today so we price your house to attract multiple offers and maximize your return on investment.