Two Questions To Ask Yourself if You’re Considering Buying a Home

If you're thinking about buying a house, you're probably paying attention to everything you hear about the housing market. And you get your information from a variety of sources, including the news, social media, your real estate agent, conversations with friends and family, overhearing someone chatting at the local supermarket, and so on. Most likely, home prices and mortgage rates will rise significantly.

Take a look at the data to help you cut through the noise and get the information you need. As you make your decision, here are the top two questions you should ask yourself about home prices and mortgage rates:

1. Where Do I Think Home Prices Are Heading?
Pulsenomics' Home Price Expectation Survey - a survey of over one hundred economists, real estate experts, investment and market strategists - is one reliable source of that information.

According to the most recent release, the experts polled predict a slight depreciation this year (see red in the graph below). But here's the most important context. The worst of the home price declines are already behind us, and prices are beginning to rise again in many markets. Not to mention, the 0.37% depreciation shown by HPES for 2023 is far from the crash that some predicted would occur.

Let us now turn our attention to the future. The green in the graph below indicates that prices have turned a corner and will rise in 2024 and beyond. The HPES predicts that after this year, home price appreciation will return to more normal levels for the next several years.

So, why is this important to you? It means that your home's value will likely rise and you will gain equity in the years ahead, but only if you buy now. Based on these projections, waiting will only cost you more money in the long run.

2. Where Do I Think Mortgage Rates Are Heading?
Mortgage rates have risen in response to economic uncertainty, inflation, and other factors over the last year. According to the most recent reports, inflation, while still high, has moderated since its peak. This is a positive sign for the market and mortgage rates. This is why.

When inflation falls, mortgage rates tend to fall as well. This could be why some experts predict that mortgage rates will fall slightly over the next few quarters, settling somewhere between 5.5 and 6% on average.

But no one, not even the experts, can predict where mortgage rates will be next year, or even next month. This is because there are so many variables that can influence what happens. So, to give you a glimpse of the various outcomes, consider the following:

If you buy now and mortgage rates do not change: You made a good decision because home prices are expected to rise over time, so you beat rising prices.

If you buy now and mortgage rates fall (as predicted), you will have made a good decision because you bought before home prices increased. You can always refinance your home later if interest rates fall.

If you buy now and mortgage rates rise: If this occurs, you made an excellent decision because you purchased before both the price of the home and the mortgage rate rose.

In conclusion
If you're thinking about purchasing a home, you should know what to expect in terms of home prices and mortgage rates. While no one can predict where they will go, expert projections can provide you with useful information to keep you informed. Rely on a reputable real estate professional who can provide expert insight into your local market.

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