Now is the time to buy…
Contrary to what some may think, now is a great time to purchase a home! With a recession looming overhead and its uncertainties, many consumers are hesitant to make a move. What they may not realize is that they could be missing out on a small window of opportunity in this ever-changing market.
Let’s look at the facts:
Historically speaking, we are sitting at solid mortgage interest rates. The 50-year average, for a 30-year fixed, is 7.75%. We are below that average today. The chart below shows the history of mortgage interest rates dating back to 1970. When looking at rates with that perspective, one can see that they are favorable over the long run.
Chief economists predict rates to drop below 6% by the end of 2023. Why? A recession leads to lower mortgage interest rates. History has a way of repeating itself; the last 11 recessions since the 1950s lead to mortgage interest rate reductions.
With the predicted interest rate reductions, we will surely see homebuyers come out of the woodwork. This is one of reasons 2023 is forecasted to have the 3rd largest purchase market in the last 21 years. 2024 and 2025 look even more promising. Sure, there has been a dip in overall demand from 2022, but that dip should prove to be short-lived.
The upswing in the purchase market all boils down to simple economics: supply and demand.
Supply: Housing inventory is at an all-time low. In fact, we haven’t seen shortages this significant since the 1970s.
Demand: It’s soon to be at an all-time high, and will continue at these record levels for the next decade. The reason being: millennials. The median age for a first-time homebuyer is 36 years old, according to the National Association of Realtors. Most millennials are approaching that age. The last time we saw demand like this was in the 80s, with baby boomers. Millennials outnumber baby boomers by millions!
With the influx in demand, some may ask, is buying a home a good investment? Let’s discuss. There have been some temporary shifts in the median sale price for homes in the past 50 years. Prices have always risen exponentially from where they were in prior years. In short, there may be short lived downturns, but overall home prices remain steady and trend upward.
Homeownership can also provide tax benefits including deductions for mortgage interest, property taxes, and certain home improvements.
One also must consider the benefit of stable housing costs. When you rent you are subject to rent increases, and that holds true now more than ever, with rent at all-time highs.
Finally, there is the personal satisfaction that owning a home can provide, as well as the ability to customize to your liking. We love seeing the joy that homeownership brings to our clients and their families. Homeownership can be a wonderful accomplishment for those that have the means.
Remember that window of opportunity we spoke about earlier? We are in it! America is on the cusp of entering into it the highest purchase demand in US history, and supply will remain at record lows.
If you or someone you know has been considering making a move, the time is NOW, while others are waiting. You may have an upper hand because the market is favorable to the buyer in some areas, but this will not last!
Contact us today to start your free, no-obligation mortgage consultation! We are always here to help and happy to do so.