Firstly, I wish you and your loved ones a joyful holiday season – Merry Christmas, Happy Hanukkah, and a Happy New Year! As we transition into 2024, I’d like to address the consideration of purchasing a home, especially if you’re contemplating waiting due to high prices and interest rates.
While it may feel like interest rates are currently high, it’s crucial to note that historically, they are not at their peak. Anticipating some fluctuation, it’s important to recognize that real estate trends aren’t typically heavily influenced by election years. Even during the recent past, changes were more associated with external factors like COVID-19 and monetary policies.
There are tools available, such as mortgage products like a 2-1 buydown, allowing you to pay an upfront fee to lower your interest rate by two percentage points for the first year and 1% for the second year before returning to the predetermined rate.
When deciding between waiting and purchasing, it’s essential to consider your specific circumstances. While some individuals, like those living at home and saving money, may have the flexibility to wait for the right time, others paying rent may find that purchasing a property, even at current interest rates, results in a monthly payment comparable to or even lower than rent. Additionally, as rents have increased substantially, waiting might not necessarily lead to a more favorable situation. Here are the top three reasons why you should buy now:
1. Home values will always rise over time. One of the most compelling arguments in favor of buying a home now is the historical trend of home values consistently rising over time. Real estate has proven to be a solid long-term investment, with property values generally appreciating despite short-term fluctuations. By entering the market sooner rather than later, you position yourself to benefit from this upward trajectory.
The principle of supply and demand plays a crucial role in driving home values higher. As populations grow and urbanization expands, the demand for housing increases. Limited land availability and the cost of construction materials contribute to the scarcity of housing, further propelling property values upward. By purchasing a home now, you not only secure a place to call your own but also position yourself to reap the rewards of future appreciation.
“Putting off your home purchase will cost you in the long run.”
2. Interest rates will take a long time to come down and may even rise again. Interest rates are a key factor influencing the affordability of homeownership. Currently, we find ourselves in a relatively high interest rate environment, and rates could stay this way for a while. No one knows exactly what will happen, and economic conditions can change. There’s a general consensus among experts that interest rates are more likely to rise than fall in the foreseeable future.
Waiting for interest rates to drop further may seem like a strategic move, but the reality is that predicting market fluctuations is challenging. Take the initiative and secure a mortgage now. You can look into various aid programs like down payment assistance and 2-1 buydowns. Additionally, you can always refinance late.
3. Start building equity now for a greater return on investment. One of the most significant advantages of homeownership is the opportunity to build equity over time. By purchasing a home now, you initiate the wealth-building process sooner, allowing you to capitalize on the potential for increased property values. As you make mortgage payments, a portion goes towards reducing the principal, further boosting your equity. The longer you own your home, the more equity you accumulate, providing financial stability and the potential for a significant return on investment when it’s time to sell.
While waiting for the “perfect” time to buy a home may seem tempting, the current market conditions present compelling reasons to act now. There’s a strong case for entering the real estate market sooner rather than later. Seize the opportunity and embark on the journey to homeownership—your future self may thank you for it. If you have any questions, don’t hesitate to reach out to us by phone or email.