There has been a lot of news lately about how it is “not a good time” to buy property. We’re here to argue differently.
Fannie Mae reports that would-be homebuyers are feeling the squeeze of higher home prices and mortgage rates. Only 17% of consumers report It’s a “Good Time to Buy” a home. The Fannie Mae Home Purchase Sentiment Index remained relatively flat in May, decreasing by only 0.3 points but inching nearer its 10-year- and pandemic-low of 63.0 from April 2020.
Additionally, 70% of respondents expect mortgage rates to continue their recent ascent over the next 12 months. Purchase mortgage rates, after hitting a 13-year high of 5.27% in May, fell for three consecutive weeks. Rates last week averaged 5.09%, essentially flat from the prior week, but significantly higher than the 2.99% rate during the same period last year, according to Freddie Mac PMMS.
The Federal Reserve raised the interest rate by a half percentage point on May 4 and repeatedly has signaled it will continue to raise rates this year and into 2023. The Fed’s interest rate does not directly affect mortgage rates, but higher interest rates steer market activity to create higher mortgage rates and reduce demand.
Now, with all of this information, it’s natural to think that it is not a good time to buy.
Fannie Mae’s Economic and Strategic Research (ESR) Group had forecast a slowdown in home sales for the second and third quarters of 2022, followed by a softening in construction activity and a noticeable deceleration in home price growth.
This means that even though mortgage rates are steadily going up, home prices are going to start tapering off. The market is going to slow down and there will not be as many bidding wars happening.
Recently, we had a client who bought a home in August of 2021. Most would say that was the height of the market.
They bought the home for $1,357,000 in Ladera Ranch. Over the course of the last 10 months, there have been four homes in their neighborhood that have sold:
- October of 2021 – $1,400,000
- January of 2022 – $1,570,000
- February of 2022 – $1,685,0000
- March of 2022 – $2,100,000
These client’s home is now estimated to be worth $1,760,000. That’s $403,000 appreciation in just 10 months of homeownership.
Buying a home right now is not easy, but it is worth it because of the immediate appreciation most homeowners are experiencing.
Talk to us today about your different opportunities in homeownership.