There’s no denying it: the American housing market is on fire. Prices are rising, and homes are under contract within hours. It’s no wonder potential buyers are nervous. But experts agree: now is the time to buy a house.
Don’t believe us? Read on to learn more.
5 Reasons Now Is the Time to Buy a House
Still not sure if the time is right? Here are 5 reasons that NOW is the time to buy a house.
1. Interest Rates Are Climbing
With U.S. inflation at its highest levels in more than 40 years, the Federal Reserve is struggling to bring soaring prices back to normal. In an attempt to combat inflation, the Fed raised interest rates, and mortgage lenders increased their rates in turn.
In January 2022, 30-year fixed mortgage rates hovered around 3.5%. As of this writing (only weeks after the Fed’s latest rate hike), the same mortgages are now over 5.5%.
And the Fed isn’t done yet. Federal Reserve Chair Jerome Powell said recently that he would continue raising interest rates until inflation slows.
So, you might ask, how is that a sign to buy a house now? The simple answer is that interest rates might not be this low for long. Sure, they are higher than we’ve seen in several years. But they are likely to continue climbing throughout 2022 and beyond. Waiting to buy a house could mean owing thousands more in interest over the life of the loan.
If you’re waiting for interest rates to fall to pandemic levels, you could be waiting decades. It’s best to buy a house now, lock in these rates, and avoid getting stuck with even higher interest.
2. The Market Shows No Signs of Slowing
Many potential buyers are leery of buying now, fearing the market will “crash.” While the current housing market brings back memories of the 2009 crash, experts say it’s nothing like last time. Yes, housing prices are soaring, just as they were pre-2009. But the culprit of that crash wasn’t the rising prices, but the shady lending practices offered to underqualified buyers.
Today, those lending practices no longer exist. Prices are high, but lenders have much more stringent qualification standards for home buyers. That means fewer people will default on loans, which keeps the market stable.
There is no crystal ball; the housing market could take an unexpected turn. But all signs point to continued strong growth. We might see a slight slowdown in growth compared to last year, but economists continue to predict higher than average growth in the coming years.
3. Values (and Housing Prices) Continue to Rise
Because experts expect the housing market to remain strong, home buyers can expect housing prices to keep rising. Now is the time to buy a house because prices aren’t likely to come down any time soon.
Buying a house now also means it will continue to increase in value. Even in this hot housing market, your home will likely gain equity, making it an excellent long-term investment.
4. Rents are Soaring
Housing prices are on the rise, but rents are rising even faster. All across the country, renters are seeing their monthly payments soar. In some cities, rents are up more than 40%. And those rental payments are going directly into the pockets of the landlords.
If you’re currently renting, you could be putting that money into a home of your own instead. Those payments could go towards owning a home – and one likely worth more than you paid for it. As a renter, you have very little control over your monthly payment. But buying a home now means you’ll lock in your mortgage payment, and it will stay the same throughout the life of your loan.
Don’t believe that buying is better than renting? Read this blog.
5. Inventory Remains Limited
It’s all about supply and demand. Currently, there are far more buyers than there are homes in the American market. The pandemic only exacerbated the problem, with labor and supply shortages causing even fewer new construction homes than projected.
With so few homes and so many people vying for them, the problem isn’t likely to sort itself out soon. That means inventory will remain low for perhaps years ahead, keeping demand – and therefore home prices – elevated.
Whether you’re a first-time home buyer or you’re searching for your forever home, now is the time to buy a house. Prices are up, but the market doesn’t show signs of slowing down. Homeownership remains as strong an investment as ever.