You might be wondering, there are so many factors that determine whether to buy or sell now is a good idea. A few of these factors include financials, supply and demand, and mortgage rates. Although these factors play major roles, the most important thing to consider is if it’s the right time for you. Do you find it to be logical? You are the one purchasing the real estate. Not the market, not supply and demand, not interest rates. If you feel the need to start your journey to homeownership, let not these things drive you away.
The truth is, purchasing a home still generally represents a good investment. Even when mortgage rates are somewhat high. It is also true that mortgage rates have increased. And since the recent record lows, this has an effect on affordability. Having said that, pressure is being applied to both sides of the market by the “lock-in effect”. Now, there are fewer buyers looking for new homes and fewer sellers looking to move up or downsize.
But, yet again, if you have the financial means to do so, make an investment in your future. Instead of spending your rent money and supporting someone else’s investment dreams. Control your controllables and buy that piece of real estate you’ve been eyeing. Don’t wait for interest rates to fall before making a sound decision. If it makes sense for you, you can refinance the rate later.
Mortgage Rates Are still Historically Low
The Freddie Mac chart below compares mortgage interest rates throughout history. According to this data, mortgage rates are still significantly lower than they were decades ago.
Looking at the bigger picture, rates are still competitive. Currently, many people can borrow money to pay less than 4.5% of the sale price of a home. For comparison, mortgage rates reached 16% in the 1980s, and they rose above 6% in the 2000s.
Although it may be tempting to put off purchasing a home until interest rates fall, no one can foresee when or even if that’s likely to happen. There are some difficulties with affordability, but your needs also matter. As noted in a recent Bankrate article:
“Deciding whether it’s the right time to sell your home is a very personal decision. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. …Your future plans and goals should be a significant part of the equation…”
The Bottom Line
In the end, having a positive attitude toward interest rates can help you stay focused. Whether it may be on your price cap and the feature that you think is most important in a home. If everything is working in your favor, think about it. Check to see if you have the necessary funds available, you’ve found a home you like, and everything else is pointing in the same direction. Start your real estate journey if that holds true.
What To Do:
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