Timing is everything in the real estate market, and it can be tough to know exactly when the right time is to buy. Lately, many potential homebuyers are hesitating to take the leap into buying a home because they think it’s a bad time to buy. Though 7 out of 10 Americans polled by Fannie Mae said they would rather buy than rent, a record 82% said it was a bad time to buy. So what’s the best decision? Dream Finders Homes wants you to feel confident in your new home purchase. We’ve worked with our trusted loan officers to give you insight into why it’s actually a great time to buy.
The Current Landscape
As of August 2023, interest rates for mortgages have climbed into the 7% range, leaving many buyers concerned about affordability. While interest rates are an important factor to consider, if you look beyond rates alone, there are other factors happening that can make it an opportune time to enter the housing market.
There’s been a large shortage of inventory. In August, there were roughly 669,173 homes available nationally. Which is about half as many homes as there were available 5 years ago. Low inventory levels though don’t mean there are no homes. With new construction, there are still many options available throughout our communities to explore.
The combination of lower inventory and higher rates has pushed sellers to offer financial incentives to homebuyers. This means they are even more likely to offer seller assistance to help offset the current rates. A seller assistance or a temporary rate buydown is when the seller contributes a portion of the buyer’s monthly mortgage payment for the first two years. This can significantly ease the financial burden for apprehensive homeowners and sweeten the deal.
Appreciating Home Values
Despite what some may think, the value of homes is still increasing. According to Home Price Forecasts for 2023, the average home price will increase by 2.5%. Getting into the housing market now will give you more time to reap the benefits of future home appreciation.
The Future Predictions
While the present might seem uncertain with high-interest rates, consider looking to industry experts who carefully gather data and analyze different trends and changes in the industry to make predictions. Here are the rate predictions for 2024 by a few reputable sources.
- Mortgage Bankers Association 4.9%
- National Association of Realtors 6%
- Moody’s Analytics 6%
- Goldman Sachs 5.9%
- Morgan Stanley 6%
- Realtor.com 6.1%
- Fannie Mae 6.1%
- Morningstar 5%
Did you know that for every 1% that the interest rate decreases, 5 million Americans enter the housing market? Therefore once the rates do drop, all of the buyers who have been waiting on the sidelines will rush into the market at once causing demand to increase. With inventory so low and a higher demand, you’ll see multiple offers causing you to get into bidding wars among the flood of buyers.
There are a couple of things this combination of factors will do. First, buyers will find themselves competing in a seller’s market where they will end up paying over the list price as well as waiving concessions to get the home. Second, sellers will be less willing to negotiate due to multiple offers. They’ll also be less likely to accept contingent offers.
Now is the Time to Buy!
There are still reasons why now is a great time to buy and there’s only a short window to take advantage of these reasons. You can take advantage of current home pricing as well as the benefits of seller assistance, such as a rate buydown or a lower fixed rate. Then once rates fall, you have the option to refinance at the lower rate. Enjoy the best of both worlds: a new home now with the current pricing (before they go up due to demand and bidding wars) and the advantage of the low-interest rates when they’re available.
It’s okay to be cautious about buying a home with high-interest rates, however the current market conditions offer benefits in favor of acting now versus waiting. Once a deal is closed, you can’t renegotiate the price, but you can always refinance for better rates. Even with lower inventory available, homes are still steadily appreciating which is a major plus for buying a home versus renting.
Dream Finders is here for you in whatever market condition. You can take advantage of our financing incentives and myriad home options as well as work with our professional team members and trusted lender, JET HomeLoans. Your dream home is within reach! To learn more about the homes we offer and answers to any other questions, connect with us online.