Ok, I’m a mortgage lender so I am a little biased on the issue, I will admit, however, let's
look at the circumstances around your decision to purchase. Why are you looking to buy? Don’t like some things about your current home? Sorry, I cannot help with pesky or annoying
neighbors. Are you renting and tired of throwing money away every month? Concerned about housing prices and interest rates? There is a lot to unpack so let’s get into it…
Here are some options if you currently own a home. One of your options could be using the
equity in your home to make renovations inside or out with a cash-out refinance. Another option is to sell your home contingent on selling your current home. These offers get accepted at a much lower rate than offers without contingencies. But if you have the determination and patience and are ready to make multiple offers, this may be an option for you. You can also sell, rent for a while, and buy. As you can see, many options, you just need to figure out what works for your long-term goals.
Here are some options if you are renting. I get it, renting gets old. Having a place to call home is on every renter’s mind. The first two things that I hear most from renters are housing prices and interest rates…I will come back to those. Let’s first talk about being pre-qualified to purchase, I think it's more important. If you can afford a home, then you should buy…in almost any market.
Real estate appreciation is a thing. But I can already hear it. “What about the housing crash in 2008, I’m going to wait?” Yes, there are some years where you will take advantage of
depreciation, however, we can all attest the real estate market has appreciated since the 2008 crash and there are no signs that a housing crash is expected anytime soon. Know what it takes to buy a home to understand if you are completely ready.
That leads to housing prices. You may see some housing price adjustments in our area. But that is what they are, pricing adjustments, this is not a crash. The only homes that are having price adjustments are those that were overpriced coming into the headwinds of sky-high inflation and rising interest rates. Many real estate professionals nationwide have concluded the housing markets of 2020-2021 increased by double digits. The housing market in 2022 and the next few years will see the housing market continue to increase but only by low single digits. So if you are waiting for housing prices to dip, now is that time. They will continue to rise from here, not at the same pace as the past couple of years, but they will rise.
This brings us to our next topic, interest rates. I will say this again. If you can afford a home,
then you should buy…in almost any market. Why? Interest rates go up and they go down with all kinds of market data. Will we ever see 1-2% interest rates again? I hope not. For that to happen, we would need to go through another pandemic, or odd market factor with large amounts of uncertainty and we can all agree, that we have had plenty of uncertainty for a lifetime.
I understand no one wants to hear this, but 5-6% interest rates are normal. What about those people saying, “Back in my day interest rates were 18%!” Yes… and housing prices were cheaper, but we made less money per year, now we make more money per year and can afford more, etc... We can take these arguments apart and end up at the same place, where we are today’s market. I can only speak for North Carolina’s market, but I see evidence throughout several markets and data that housing prices will continue to rise, and so will interest rates to curb inflation. Hopefully, rates don’t rise high enough to cause a recession, that will be the balancing act for the Federal Reserve for the next few months at least.
One thing we haven’t discussed is the tax breaks we get for paying higher interest on a home that we own. Not something to jump up and down about, but that should give us something to look forward to until we see inflation dealt with and market certainty return.
I think you have an idea of the ongoing theme here, I can assure you that you have, but just in case, here it is again. If you can afford a home, then you should buy…in almost any market.
Steve Medina
Loan Officer
C: 919.985.3076 | O/F: 919.694.0825
smedina@uhm.com | uhm.com/smedina/ LO NMLS 1900697 | NC I-191160
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