Is The Current Real Estate Market Bad?
Whether or not it is a good time to purchase a home depends on a number of factors, including the market in which you are shopping, your willingness to accept higher interest rates in the hopes of refinancing in the future, and the employment outlook for the near future. When it comes to purchasing a home, your objective may be to move in when mortgage rates are competitive and home prices are low.
Especially for first-time buyers, it may be advantageous to delay purchasing a home and save a bit of money if mortgage rates are rising. The most important lesson from the current hot real estate market is that buying now means avoiding future mortgage rate increases.
A year from now, mortgage rates are likely to be substantially higher, despite the fact that home prices have decreased. Higher interest rates will increase the cost of homes for purchasers and the burden of monthly mortgage payments for prospective borrowers. Regardless of the amount of mortgage debt, higher interest rates result in higher monthly payments.
It is best to limit your overall housing costs to no more than 30 percent of your after-tax income, regardless of whether you are purchasing when housing prices or mortgage rates are higher, or both. A rise in interest rates would affect anyone with a mortgage, a car loan, savings accounts, or stock market equity. The year 2023 may be a better time than ever to invest in real estate if you consider both the interest rates and the housing prices.
In 2022, rising mortgage rates compounded record-breaking home prices, squeezing out more prospective buyers from the red-hot housing market. In fact, mortgage demand is at its lowest level in 22 years as a result of rising home prices and interest rates. It would not be unexpected for borrower volumes to continue to decline this year, especially if interest rates continue to rise and housing prices remain flat. For more information, please contact us.