Why Waiting to Purchase Is Costly

Hello! If you are reading this, you are most likely considering purchasing a home and are concerned about the housing market. There has been a lot of fear surrounding real estate prices, whether there is a housing bubble similar to what we saw in 2009 and whether it makes any sense to purchase a home when interest rates are high.

In order to help you, we have put together some information that should be helpful to help you understand what is driving the market and what the potential costs are of waiting to purchase when interest rates fall. One important aspect to remember is that real estate is not static. Waiting to purchase because rates are high does not stop real estate appreciation, which continues to heat up at a higher rate than the historical average on a national basis. This means the same house you don't purchase today will likely cost six months more and likely much more a few years down the road.

Video Quick Points:

Market Timing:

• Despite high-interest rates, there's a significant opportunity for homebuyers right now.
• Waiting for mortgage interest rates to drop may not be beneficial.

Supply and Demand:

• Real estate market value is determined by supply and demand.
• Currently, there's a severe shortage of housing supply with high demand.

Pent-Up Demand:

• Many potential homebuyers are waiting on the sidelines due to various concerns, creating pent-up demand.

Impact of Falling Interest Rates:

• When interest rates drop, a surge of buyers will enter the market, increasing competition and potentially driving up prices.

Move-In Ready Homes:

• Move-in ready homes are selling quickly, often with multiple offers and over the asking price.

Population Growth:

• The U.S. population has been steadily increasing, leading to increased demand for housing.

Housing Inventory:

• There's a significant lack of housing supply, with some estimates suggesting a shortage of four to seven million homes.

Housing Appreciation:

• Despite concerns, housing appreciation is occurring, with some segments appreciating faster than others.

Builders Falling Behind:

• Builders are struggling to keep up with demand due to material costs, labor shortages, and an aging skilled labor force.

Negotiation Opportunities:

• Buyers can negotiate with sellers and use seller concessions, including 2-1 buy-downs, to ease the transition into homeownership.

Refinancing Opportunities:

• Refinancing in the future, when rates potentially drop, can lower monthly mortgage payments.

Appreciation + Median Sales--Understand the Measurement

Keep in mind that real estate appreciation is not directly correlated to median home sales. Current lower-priced properties are increasing in price very quickly and account for a larger percentage of houses being purchased due to the impact of higher interest rates. Higher-priced homes have suffered with the higher interest rate environment. Because using a median measurement takes the middle value of the number of homes sold, more homes sold in a lower price range will inaccurately show a falling or low appreciation when demand is actually increasing against a diminishing supply of vacant homes to purchase.