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With interest rates still around 7% and home values still high too, why in the world would you want to be a home buyer in this market? Well I'll give you 5 reasons to.
Home Prices Are Expected to Decline: According to Fannie Mae, home prices are expected to decline 1.5% this year. This was back in November of 2022, when the leading provider of mortgage financing in the US made this prediction.
Although some parts of the country have started to see a decline, parts of Connecticut continue to see homes sell for over asking. Just a few days ago a home in Wethersfield a home sold for $437,000, $60,000 over asking.
In Hartford County, where Wethersfield is located, sale values are up as of the end of March from a year ago. The average sale price is up 4.3% from a year ago.
If you just look at this year, average prices in Hartford County rose $15,000 since January. So Fannie, we here in the Hartford area are just waiting for that decline.
If prices do finally come down, it will be a welcome site for potential buyers. And a very good reason to buy a home right now.
Mortgage Rates Are Relatively Low: Historically a 7% mortgage isn't really that bad. What hurts is the high home values combined with that interest rate.
Those that remember the 80's, remember interest rates well above double digits. In fact in 1981, the average interest rate was above 16%, but the median home price was $69,000.
Interest rates always go up and down. The current 30-year fixed rate is 6.68%, but just a week ago, it was 6.93%. Two weeks ago it was 6.2%, and a month ago it was 6.9%.
The best thing to do with interest rates is to monitor them. They shouldn't be the reason to not buy. If you have a fixed rate, I would refinance, when you see a significant drop.
The housing market is being less competitive: High interest rates, high inflation, slow economy, and increased inventory are all factors in making the market less competitive.
I already spoke about high interest rates, but the inflation rate has actually gone down from 6% to 4.98%. It is still at a higher rate than the long term average, which happens to be around 3%.
According to an article this month in US News, economic growth is slowing to 1.2% this year, and 0.9% next year. As for an increased inventory, Hartford County saw an increase of over 60+ homes from February to March.
As a buyer, the last thing you want is to be in a multiple offer situation. Less competition benefits you greatly. Although this Realtor still sees plenty of listings with multiple offer situations out there.
You can build equity: One of the best reasons to buy a home is that you can build equity. Your mortgage payment is going towards something, unlike rent.
Everytime you pay your mortgage, yes you are paying interest, but you are also paying down the loan too. Once you pay enough of it down, you can then access that money through a home equity loan.
Sometimes you don't even have to wait, if the value of your home goes up, that is equity, you then can tap into. No matter how the market is, buying a home is like buying nothing else. It is an asset that benefits you in so many ways.
This equity you gain from owning a home, can then pay for so many things like, home renovations, retirement, your kids college, or simply just to build up your wealth.
Homeownership can provide a sense of security: As a homeowner, you don't have to worry about evictions. Yes, if you don't pay your mortgage you can lose your home to foreclosure, but that is really the only way.
If you rent a home, you have to abide by a lease, and you are not allowed to make changes unless approved by your landlord. If you break your lease in anyway, that is grounds for eviction.
As a homeowner you can do pretty much anything as long as it is within the law, and the rules of the town or city you live in. Also your mortgage stays the same through out the life of the loan. Rent can go up at pretty much any time.
Another way renting can be insecure is, the landlord can sell the property really at any moment. New ownership may mean, you have to find another place to live. Having this sense of security that homeownership provides is very important if you have a family.
So those are 5 reasons to buy a home now. The first three are kinda iffy, but these last two should be reason enough to buy a home in any market. Here is another bonus reason that works in any market.
Tax benefits: There are several tax benefits to owning your own home. The most notable is deducting the mortgage interest you pay up to a certain about.
You can do the same with your property taxes, and a home equity loan. There are also tax deductions for having a home office, being a first-time home buyer, and even running an energy efficient home.
So if you are ready and able to buy a home, contact your Hometown Realtor. I can help you get started on your way to all of these benefits that come with home ownership.
