With the real estate market being what it has been with an extreme seller's market-leading to higher than normal selling prices, it may feel like the best thing to do is wait before purchasing a new home. However, you have to ask yourself "how much will it cost me to wait to buy?"
There are a number of factors that you should consider. For instance, if you are renting, that money could be going into a mortgage payment that is helping to build equity versus just putting a roof over your head.
Another factor to consider is interest rates. Where will the rates be a year from now? No one has a crystal ball but at some point, interest rates will most likely go up. When you consider a higher interest rate over the life of a loan, that could lead to a much higher cost to you versus buying when interest rates continue to be as low as they are in today's market.
A third thing to consider is housing prices. Although housing prices have been higher than usual, we are starting to see more affordable inventory come into the real estate market. August is the fifth month in a row that affordable housing inventory has increased. New listings are up by 6.5% in August according to Realtor.com and there are many analysts that believe we will continue to see this trend as we head into 2022 helping prices to normalize.
One final thought - As a rule of thumb, real estate appreciates 3.5% - 3.8% annually. Of course, this is not the norm in extremes scenarios such as a recession or the pandemic-fueled real estate market we have experienced over the last year and a half. However, if you plan to be in your home for more than a few years, understanding what the norm is in real estate should be factored into your decisions around real estate.
If you are considering purchasing a new home but are not sure what to do, considering the factors above is a good place to start. I am also including a link to a comparison calculator that you can use to help determine the impact of rising interest rates and home values. Please feel free to contact me directly if you have questions or would like help working through your scenario to see what makes the most sense.
Take Care.
Tim Houterloot - Broker/Realtor
317-997-0165 cell
indyhomepro@outlook.com
