Timing is considered crucial in the world of real estate. The age-old question, "Is now a good time to buy?" weighs heavily on the minds of most buyers. With prices and interest rates perceived to be high, the decision to buy real estate requires careful consideration of the current market and expert predictions of future markets. Let's look at the current real estate landscape and see if now is an opportune moment to dive into home ownership!
INTEREST RATE
Market trends are influenced by many things including interest rates, housing inventory, employment rates, and consumer confidence. Interest rates are one of the primary drivers of the housing market. At the time of this writing a 30 year fixed rate is 6.15% per Mortgage News Daily (down from the high of 8.03% in the last 52 weeks). After the extremely low rates we have seen in recent years, this may seem high but is still relatively low and provides favorable conditions for prospective home buyers. Challenges regarding interest rate are likely to continue and difficult to predict.
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In 1971 average interest rate was 7.33% If you waited for the interest rate to go down, you would have waited 22 years! You wouldn’t have purchased a home until 1993.
HOUSING INVENTORY
Housing inventory, or the supply of available homes, also plays a significant role in the current housing market. Limited inventory can lead to increased prices and increased competition among buyers. A surplus of available homes gives buyers more options and more negotiating power. We are currently experiencing very light inventory levels in Central Florida and many other areas of the country pushing prices higher.
ECONOMY
The economic health of the region and the country overall can also influence the housing market. Factors such as job growth, wage increase, and consumer confidence impact the ability and willingness to buy a home. A robust economy generally correlates with a thriving real estate market. While economic recovery from the pandemic remains ongoing and impact of the upcoming election unknown, signs of an improving economy are visible in many areas.
PREDICTING
Each quarter Fannie Mae and Pulsenomics publish Home Price Expectations Survey. (HPES) You can find it on fanniemae.com. Housing experts in the industry are polled to forecast national home price percentage changes for each of the coming five years. Current HPES shows experts are not expecting any significant price declines and possible slight increases, although at a slower rate of 3-4%, over the next 5 years. Home prices will likely be flat or continue to rise at a slow pace.
PERSONAL CONSIDERATIONS
Despite favorable conditions discussed above, buyers should also consider personal circumstances as well. Buying a home is a significant financial commitment and prospective buyers must be financially prepared. Purchasing a home should align with one's long term goals and lifestyle. Buying a home isn't simply an investment in property but also in community and a way of life. In our competitive market, buyers may need to adjust their expectations and be flexible when it comes to property features, location, and budget to find the right home. Being open to different options will increase the likelihood of success.
CONCLUSION
Nothing stays the same in real estate! We are all at the mercy of interest rates, inventory, and the economy. Individual factors, including personal circumstances and long term goals, also come into play when considering buying a home. While the current market offers favorable conditions and forecasts for the next five years look good, prospective buyers must evaluate their financial readiness and conduct some of their own research before making a final decision. With some planning and consideration, buying a home in our current market can be a rewarding investment in one's future. Teaming up with a real estate professional is a good first step.
By TAMMY CARNS
Tammy Carns is a licensed real estate professional with Revel Realty and an active member of the Dr Phillips community. To learn more about Tammy, CLICK HERE.
