Many homebuyers are choosing to wait in regards to purchasing a home.
Good Monday Morning!
Many homebuyers are choosing to wait in regards to purchasing a home. They are doing this in hopes of seeing mortgage interest rates drop over the months ahead. My thoughts are that this may not be the best strategy. First of all, there is no promise that mortgage rates will decline soon. It has been widely publicized that we will see mortgage rates drop later this year. This could be wishful thinking as we watch inflation rates continue to climb and our overall economy is not fairing well. At the same time, the government continues out-of-control spending, which will only further the risk of continued high inflation rates. The other unknown is the price of housing. We continue to see inflation with home prices and low inventories. My guess is that home prices will most likely not go down any time soon, and we may see home prices continue to increase as a part of our national inflation problem. My suggestion for homebuyers at this time would be to get serious about purchasing a home soon. Purchasing a home now may be a great financial decision. The thought of buying now and not risking higher home prices or even higher mortgage interest rates makes sense. If mortgage rates do decline, refinance! The following is an article from "NAR" that talks about why making a home purchase now may be a wise decision.
Mortgage rates edged up this week, prompting a pause among some would-be house hunters. But here’s why they may not want to wait.
Home shoppers are sensitive to mortgage rates, which was made clear this week with an increase in the average for the 30-year fixed-rate mortgage. The rate rose to 6.77%, and mortgage applications for home purchases fell 3%, according to the Mortgage Bankers Association.
Every notch up and down in rates can impact home buyers’ purchasing power, but borrowing costs have largely stabilized. “While mortgage interest rates edged up weekly, the overall trajectory from fall 2023 is down and is now a full percentage point below the recent high” when rates neared 8%, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. “While mortgage interest rates may come down to the low 6% range in the middle to later part of the year, buyers must weigh what makes the most sense for them. Timing the real estate market based purely on mortgage interest rates—especially marginal changes—rarely works when new babies, marriages and jobs are the real decision-makers.”
Buyers may not save much by waiting, either. Home buyers purchasing the typical home at $400,000, with a 20% down payment, would likely have a monthly mortgage payment of about $2,080 at this week’s rate average, Lautz says. Last week, when rates averaged 6.64%, home buyers could have paid about $70 less per month—but that was based on a median home price of $391,700.
Home prices are rising quickly. The median price of an existing home surged to an all-time high in December, according to NAR, and prices are expected to continue to climb. The annual median home price is predicted to increase by 1.4% this year, and by another 2.6% in 2025, to $405,200, NAR’s forecast shows. Plus, housing inventory remains at historical lows and remain a major obstacle for would-be home buyers. That will keep pressure on home prices, economists say.
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