Sep 13 2022

If you wait to buy, will it cost you more?

With today's housing market, homebuyers want to know: Buy now or wait?

Whether you’re a renter who’s dreaming of becoming a homeowner or a homeowner who’s dreaming of your forever place: Answering two questions can help you determine if it makes more sense to buy now or wait.

You can ask:

  1. Where will home prices be in a year?
  2. Where will mortgage rates be in a year?

Over the next year, home price appreciation is expected to slow. However, this doesn’t mean home values will depreciate. Prices may still rise at a decelerated rate. CoreLogic currently predicts a 3.8-percent year-over-year increase in home prices, down from the 15.8-percent increase from last year.*

As for mortgage rates: Though they’ve fluctuated related to economic changes and inflation, many housing authorities expect mortgage interest rates to stabilize. Some forecasts show that mortgage rates may even potentially move lower in the year ahead.

What might happen if you wait to buy a house?

No one knows exactly what mortgage rates will do. But based on the projections above, waiting until rates drop can make the cost of borrowing less expensive. However, it’s still important to factor in a predicted increase in housing prices. Today’s typically priced $356,026 home may cost $369,555 a year from now. This also impacts how much you may pay for your monthly mortgage.

Should you buy now or wait? Connect with a local Loan Officer to find out.

Another way to look at this price increase is in the potential equity you could gain. A $356,026 home purchased today is expected to earn as much as $13,529 in home equity in the next year, according to CoreLogic estimates.* If you feel you’re in a good position to buy now, this equity growth can be a big benefit; the numbers show that a homeowner's prosperity is likely to keep growing.

Becoming a homeowner and building prosperity can set you up for the future:

  • As a recent National Association of REALTORS® (NAR) study found, homeownership is the greatest wealth source among families.
  • A typical homeowner could accrue up to $240,200 in housing wealth by living in their home for just 10 years.

Because of higher rates, the housing market is loosening up. Moderation in the market can provide more opportunities for both buyers and sellers who’ve had difficulty finding a new home that fits their criteria. In contrast, rents are still rising. The national median U.S. rent is now over $2,000. (You can read more about the cost of renting versus buying here.)

“The typical U.S. home sold below its asking price in August for the first time since March 2021. For the last year and a half, the typical home has sold for over its asking price. That means buyers are having some success negotiating prices down, something that was essentially unheard of at the height of the pandemic homebuying frenzy,” Redfin confirms.

While rising rates and home prices can seem daunting, especially if you’re a homebuyer, it may help to remember that today’s rates and prices are only returning to what’s typical for the housing market. Even though they’ve increased, mortgage rates remain below the historical average. Home price growth is also still below 5 percent, a rate that, Black Knight says, is “more in line with long-run averages.”

Of course, there are still reasons why buying now might not make sense:

  • You may be saving up for a down payment.
  • You could be working on your credit so you can qualify for a better rate.
  • You may be planning to move to a new area or city in a few months or years.

If current rates are a concern, consulting with a Loan Officer could provide you with more options. For example, you might use a Temporary Buydown to lower your rate for the first two years of homeownership. Or you may explore shortening your loan term or increasing your down payment to potentially qualify for a lower rate.

Either way, forming a relationship with a Loan Officer can give more insight into how to keep your mortgage affordable—and how to determine when to purchase.

At Academy, we believe homeownership is for everyone.

If you’re wondering whether you should buy now or wait, we’d love to help you weigh your options. Whether you’re a homebuyer or a seller looking for a new house, a quick personal assessment is all it takes. Reach out to an Academy Mortgage Loan Officer for guidance.

This is for informational and educational purposes only and not intended as an advertisement as defined by Regulation Z. Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed.