The current real estate market is a chaotic experience unless you have a trusted guide by your side. Of all the various decisions to make, we’ve found the financial part to be the simplest. Here’s why.
The decision to make a move is complicated. Many think it revolves around money, when in reality — money is the easiest part. If your needs are changing or you are going through a life transition, then your personal goals and needs will shape what matters most. The decision to buy your first home or sell your current home can be overwhelming, but the good news is that you have more options today than ever before.
Buyers Should Ask Two Questions
When deciding to buy now or wait until next year, the financial aspect of the purchase is easy to evaluate and comes down to two questions:
- Do I think home values will be higher a year from now?
(As of October 2021, experts predict 12% appreciation in August 2022)
- Do I think mortgage rates will be higher a year from now?
(Experts forecast 4.0% interest rates at the end of 2022)
If the experts are correct, then the graphic above explains the impact of waiting.
The money piece is straightforward, if the answer is ‘yes’ to either question, you should strongly consider buying now. If the answer to both questions is ‘yes,’ you should definitely consider buying now.
Nobody can guarantee what home values or mortgage rates will be this time next year. However, the experts seem certain that prices will rise and interest rates will tick up throughout the next 12 months. While the current housing market is still very much in favor of sellers, things are shifting a bit. We’ve seen an increase in homes coming on the market, and a big decline in the number of bidding wars.
What Does This Mean for Buyers?
If the experts are correct and home prices increase by 12% in a year AND interest rates move up to 4% by end of 2022, then here is the impact of purchasing $325,000 in today’s market vs waiting:
- You will pay $39,000 more for the same property next year — or buy now and gain $39,000 in equity
- You will need to make a larger down payment for the same home next year
- Your mortgage amount will increase by $35,100 for the same home
- Your monthly payment will increase by $308.00
Find A Trusted Guide
The financial part may be straightforward, but we know there are many things to consider when buying a home. The current market conditions also create a competitive environment with other buyers. It’s key for you to find a trusted advisor to help design a custom Search Plan and Offer Plan to ensure you not only find the right home but also win the offer!
If you’re looking forward to working with an experienced buyer specialist, Path & Post is your best bet. Let us know how we can help you.
Note: This post was updated in October 2021 to accurately depict the latest forecasted numbers.
