Why I Still Think You Should Buy That House, Even Now.

 

Invest in Yourself by Owning a Home

Are you wondering if it makes sense to buy a home right now? While today’s mortgage rates might seem a bit intimidating, here are two compelling reasons why it still may be a good time to become a homeowner.

Home Values Appreciate over Time

There’s been a lot of confusion around what’s happened with home prices over the past two years. While they did dip ever so slightly in late 2022, this year they’ve been appreciating at a more normal pace, which is good news for the housing market. And while looking at price movement over just a year or two can make you worry prices are usually this unpredictable, history shows in the long run, home values rise (see graph below):

 

Using data from the Federal Reserve for the past 60 years, you can see the overall trend is home prices have climbed quite steadily. Sure, there was an exception around the housing crash of 2008 that caused prices to break the usual trend for a time, but overall, home values have been consistently on the rise.

Increasing home values is one great reason why buying may make more sense than renting. As prices rise, and as you pay down your mortgage, you build equity. Over time, that growing equity gives your net worth a boost.

Rent Keeps Going Up Through the Years

Another reason you may want to consider buying a home instead of renting is the never-ending rent hike. If you've ever felt the pinch of rent increasing year after year, you're not alone. That’s because, rents have climbed steadily over the past six decades (see graph below):

By buying a home, you can lock in your monthly housing costs and bid farewell to those pesky rent hikes. That stability is a game-changer.

In the end, it all boils down to this: your housing payments are an investment, and you've got a choice to make. Do you want to invest in yourself or your landlord?

By becoming a homeowner, you're investing in your own future. When you rent, that’s money you never get back.

When you factor in home values consistently rising, plus the opportunity to get relief from never-ending rent hikes, homeownership can be a path to financial security. As Dr. Jessica Lautz, Deputy Chief Economist and VP of Research at the National Association of Realtors (NAR), states: 

“If a homebuyer is financially stable, able to manage monthly mortgage costs and can handle the associated household maintenance expenses, then it makes sense to purchase a home.”

Bottom Line

When it comes down to it, buying a home offers more benefits than renting, even when mortgage rates are high. If you want to avoid increasing rents and take advantage of long-term home price appreciation, let’s connect to go over your options.

Real Estate as an Asset (Infographic)

 

Home Equity Gains

 

Equity Gains for Today’s Homeowners

Today’s homeowners are sitting on significant equity. If you’re a homeowner, your net worth got a boost over the past few years thanks to rising home prices. Here’s what it means for you, even as the market gets back to normal.

How Equity Has Grown in Recent Years 

Because of the imbalance between how many homes were for sale and the number of homebuyers in the market over the past few years, home prices appreciated substantially.

And while price appreciation has slowed this year, that doesn’t mean you’ve lost all that gained equity in your home. With respect to this market "reset", experts are predicting a return to steady annual growth (around 3% annually) for the next few years.

You may have even more equity than you realize.

If you want to know what happened in our area, look at the map below from the Federal Housing Finance Agency (FHFA). It shows on average how much home prices have risen over the past five years, which has been a major driver behind equity growth.

Why This Is So Important Right Now 

While equity helps increase your overall net worth, it can also help you achieve other goals, like buying your next home. When you sell your current house, the equity you’ve built up comes back to you in the sale, and it may be just what you need to cover a large portion – if not all – of the down payment on your next home.

So, if you’ve been holding off on selling, it may be time to find out how much equity you have and how it can help fuel your next move.

Bottom Line

Homeownership is a long game and like I've said in previous posts, a great hedge against inflation. If you’re planning to make a move, the equity you’ve gained over time can make a big impact. To find out just how much equity you have in your current home and how you can use it to fuel your next purchase, let’s connect! I can provide you with a free equity update on your own home. (In MD or VA)

Happy 2023!! It's Going to be Great!

 

What Experts Are Saying About the 2023 Housing Market

If you’re thinking about buying or selling a home soon, you probably want to know what you can expect from the housing market this year. In 2022, the market underwent a major shift as economic uncertainty and higher mortgage rates reduced buyer demand, slowed the pace of home sales, and moderated home prices. But what about 2023?

An article from HousingWire offers this perspective:

“The red-hot housing market of the past 2 ½ years was characterized by sub-three percent mortgage rates, fast-paced bidding wars and record-low inventory. But more recently, market conditions have done an about-face. . . . now is the opportunity for everyone to become re-educated about what a ‘typical’ housing market looks like.”

This year, experts agree we may see the return of greater stability and predictability in the housing market if inflation continues to ease and mortgage rates stabilize. Here’s what they have to say.

The 2023 forecast from the National Association of Realtors (NAR) says:

“While 2022 may be remembered as a year of housing volatility, 2023 likely will become a year of long-lost normalcy returning to the market, . . . mortgage rates are expected to stabilize while home sales and prices moderate after recent highs, . . .”

Danielle Hale, Chief Economist at realtor.com, adds:

“. . . buyers will not face the extreme competition that was commonplace over the past few years.”

Lawrence Yun, Chief Economist at NAR, explains home prices will vary by local area, but will net neutral nationwide as the market continues to adjust:

“After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”

Mark Fleming, Chief Economist at First American, says:

“The housing market, once adjusted to the new normal of higher mortgage rates, will benefit from continued strong demographic-driven demand relative to an overall, long-run shortage of supply.” 

Remember my post on perspective??

These quotes are from experts who are talking about the nation as a whole. What about Montgomery County?? We have the same elevated interest rates, but we still have extremely low inventory - if you have read my previous blog posts, you already know that the market is driven by supply and demand. The buyer pool has gotten a little smaller with the higher rates and the slower winter season - that lowers demand. However, the supply is also really low. What does that mean - well, if a house is in a high demand neighborhood, and priced fairly - it's still going to sell pretty quickly, maybe even with multiple offers. I have seen many recent examples of this. In Montgomery County, we have our own local housing market - so rely on the local experts.

If you want to sell, don't wait for the "spring market" when more competition comes, and if you are still looking to buy - get out there now and don't give up. Lenders are coming up with all sorts of creative solutions to the higher rates, including the ability to refi without all the closing costs if the rate goes down within a certain time-frame! That's huge!

Bottom Line

If you’re looking to buy or sell a home this year, or just want to know what kind of equity you've gained over the last few years, the best way to ensure you’re up to date on the latest market insights is to partner with your trusted real estate advisor. Let’s connect!