If you are a buyer, you have likely heard about the changes taking place in our market. Perhaps you have thought to yourself, “If a shift is coming and we’re at the market’s peak, maybe I should wait for a better price.”
This all makes sense, but only if you are planning to purchase a home using cash. And this is not the case for the average buyer today. Most buyers right now are purchasing homes using a mortgage.
With that in mind, the thing you have to realize is that when you pay outright, the price of buying that home is a one-time expense. Mortgage payments, on the other hand, will hit your wallet every month. Waiting for a better price if you plan to purchase with a mortgage could actually make it more expensive to buy, since interest rates are on the rise.
If interest rates rise just 1%, then property values would have to fall 10% for you to have the same monthly payment. Given the fact that (at least) a 1% rise in interest rates is more likely than a 10% drop in property values, waiting to buy may not equate to the savings many would hope.
Buying a home for less but paying a higher monthly price for a mortgage does not make sense. The best advice I can give buyers is to meet with a lender and discuss what you can afford, and what is motivating your desire to purchase a home in the first place.
To put these current circumstances into context, it is important to realize that the market makes shifts every six to seven years. 2008 was one of the worst markets I, and many other people, have ever seen. Yet when the market shifted between 2012 and 2013, things improved. And we are now on schedule for another shift to occur. If historic precedent remains true, our market will likely continue on a six-year cycle of stabilizing, correcting, dipping, and then rising back up again.
So, per this cycle, we can expect our market to remain strong for the next six to 12 months, and then we will likely see a dip. But, after that, it will come back up.
After selling real estate for 12 years, I can tell you that market conditions do not impact everyone equally. This is why it is so important for those of you who are considering buying to connect with a lender and start discussing your options.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.