While most New Jerseyans might dream of buying a home, today’s high interest rates have prompted many to hit pause and ponder: Is now really the right time to buy, or should I wait?
The concern is understandable. In late October, rates for a 30-year fixed-rate mortgage reached a 23-year high of 7.79%. That’s more than double the rates two years earlier, adding approximately $1,000 to a typical monthly mortgage bill (assuming a 20% down payment).
Since then, mortgage rates have nudged down, but many home shoppers are still skittish about where rates might go next.
While many home shoppers might be convinced that this is a terrible time to buy, quite a few housing experts believe the current market could be hiding a window of opportunity.
Here are five reasons why purchasing a property right now makes a lot of sense—and why homebuyers might regret waiting on the sidelines.
1. You can buy a house now, then refinance later
Mortgage rates topping 7% might feel like a heavy financial burden month after month, but borrowers should note that they aren’t necessarily stuck with this same rate forever.
After their purchase, if rates subside, homeowners can refinance their home loan at a lower rate, a tactic some refer to as “Date the rate, marry the house.” A high rate, in other words, might be just a temporary inconvenience. But a home can be forever.
While no one can predict what mortgage rates will do next, real estate experts can look to other macroeconomic conditions and make some educated guesses.
While no one has a crystal ball, the general consensus by many is that rates will decrease as inflation is brought under control.
Refinancing comes with hefty closing costs, so you’d want to crunch the numbers to make sure that rates have dropped enough for a refinance to make sense.
2. Home prices are probably heading up
While mortgage rates seem to be trending downward, home prices are lately inching up. This is yet another reason it might make sense to lock in a property now rather than later.
Although experts and forecasters have been warning of the potential for home price declines, home prices have been remarkably resilient
Of course, different areas have different pricing trends, but low inventory has kept average sales prices moving upward.
3. There’s less competition
One silver lining of high mortgage rates: They’ve persuaded many home shoppers to drop out of the running. With less competition, the buyers who remain have a surprising amount of negotiation leverage.
The increasing rates have cooled the market and created these incredible opportunities for those buyers who are ready to jump in.
And while today’s market is tough financially, it’s important to remember that the market buyers faced during the COVID-19 pandemic years might have been much tougher in terms of competition.
Anyone who went home shopping during the pandemic saw the outrageous competition and multiple-offer scenarios that the low-interest rates caused which was a challenge for many buyers.
Now, however, it’s a different game with different rules.
If you’re comfortable with the monthly payment, there’s an opportunity now to lock down a home you love without having to compete at that level
4. If it’s the right time for you to buy a house, then it never makes sense to wait
While high rates and low inventory might make it difficult for many buyers to get into their next home, market conditions are only part of the equation.
The advice I give to home shoppers is that if you find a home that fits your needs and your budget and you’re ready to commit to homeownership and living in the same place for the next several years, it makes sense to move forward.