Should you buy a home now or wait? This is a common question being asked my many Americans right now. Whether you are renting a home or are currently a homeowner that is looking for a home that will better fit your needs, you may be weighing the risks and benefits of purchasing a home now versus later. We discuss some factors to consider in your decision making below.
Reasons to buy a home now
- Home prices will be higher in a year: Although home values are not expected to continue rising at the same pace as the past year, they are still largely expected to increased slightly. According to 3 major housing entities, home prices are expected to rise as follows:
- Freddie Mac: +5.3%
- Fannie Mae: +5.1%
- Mortgage Bankers Association: +8.4%
- Mortgage rates are predicted to increase: In addition to home prices being predicted to increase, so are mortgage rates. Currently, 30-year fixed rate mortgage is hovering near historical lows. However, most experts expect these rates to rise as the economy continues to recover. According to the same 3 major housing entities listed above, mortgage rates are expected to increase as follows by Q4 ’22:
- Freddie Mac: 3.8%
- Fannie Mae: 3.2%
- Mortgage Bankers Association: 4.2%
- Rental prices are expected to rise: Current inflationary pressures combined with increased property tax and insurance costs will likely result in higher rental prices. In addition, the demand for rental housing in markets such as South Florida is also expected to increase. These factors will likely result in significantly higher rental prices, thus making it considerably more difficult for renters to save for a down payment on a home purchase.
Reasons to wait to buy
- Lower demand for housing + increasing inventory: As a general rule of thumb, as inventory increases and demand decreases, prices should pull back slightly. Although we are seeing seasonal decreases in demand, the overall demand for housing is still fairly strong.
- More time to save: Depending on your financial situation, it is possible that you may be able to save more money to be used towards a down payment on a home purchase in the coming year or two. Furthermore, this may even result in increased buying power.
- Higher mortgage interest rates = less competition: As mortgage rates increase, there are naturally less buyers in the market. This results in less competition for the homes available for sale. This is particularly advantageous for cash buyers.
Most real estate economists feel that the housing market is on solid footing. Even though prices have risen rapidly over the past 18 months, the fundamentals of the market are dramatically different from what we saw during the 2008 housing collapse. With this said, it may be wise for home buyers to remain active in the market as the overall inventory gradually continues to improve. In addition, for every increase in the mortgage interest rate, buying power diminishes. Of course, every market is different. It is highly recommended that you consult with a local and knowledgeable real estate agent in your market. If you are in the South Florida market, Live South Florida Realty, Inc. has friendly and knowledgeable real estate agents that may assist you from Miami, FL north to Port Saint Lucie, FL. Feel free to contact us today!
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!