Buying a home is an important financial decision and rising interest rates are giving many prospective home buyers and sellers pause. The historic picture of interest rates show that interest rates today are middle low end. In the 1970’s, interest rates were in the teens and often high teens. It does not negate the cost increases today of higher interest rates, nor what a buyer can afford, but it is meant to show the temporary nature of rates. There is an old real estate adage, “marry the house, date the rate!” When interest rates fall in the future, buyers at today’s interest rates will have an opportunity to refinance if it is financially advantageous.
Home values have seen almost 10% growth per year in valuation for the past few years. When considering an interest rate increase of 4% to 4.5% over the past three years, there is money still to be made in investing in your home. Putting off the purchase puts off the gains of increased value to avoid the increase in a temporary interest rate.
There is a more limited inventory of ready homes than there has been in the past and some of this might be because of the increased cost of buying the next home and interest rates. The low inventory also creates pressure on prices homes sell for as more buyers offer on homes, creating a competitive process. This has come and gone during certain segments of the market in the year. It may be important for you to talk with your realtor about the market you will be working in. In any market, there are factors to consider that emphasize the importance of having a professional realtor helping you with this work.
Article by: Joseph Moylan, Realtor
Photo by: Stock Photo