Should You Buy a Home in 2022, or Wait Until 2023/2024?

The latest housing market trends have some buyers unsure if it is a good time to invest in a home purchase. It will become more difficult to invest in a house as prices have increased significantly and mortgage rates have climbed since January. And the addition of inflation and other goods has not helped with the cost of living.

The federal reserve has tried to combat large inflation increases by raising interest rates every month. Over the course of just this year interest rates have raised more than they did in three years' time previously.

But is it a good time to purchase a house or should you wait for another year?

The average interest rate on a 30-year fixed mortgage it has been hovering around the 5% mark. It has recently taken a little bit of a dip it is still a significant increase from what we have seen in 2020 and 2021. 

Here's a quick comparison of how interest rate figures are impacting home purchases using a $300,000 home purchase price for our example.

In the last month of 2021, the average 30-year fixed mortgage rate was 3.11%. With this rate on a $300,000 home, a mortgage payment would be $1282. The total interest paid over the life of the loan would accrue to $161,923. And over the entire life of the loan if you stayed in the house and paid off the mortgage you would pay a total of $461,923 for the home.

If today you are able to secure a 5.47% mortgage rate on the same 30 Year fixed loan on a purchase of a $300,000 home. This would make your monthly mortgage payment $1697. This would mean over the life of the loan you would pay $311,578. And you would pay a total of $611,578 on the home.

Looking at it in these terms can make purchasing a home alarming or maybe even frustrating. But when you look at where the real estate market is forecasted to go over the near future you can see that purchasing sooner rather than later may be in your best interest.

Predictions for the housing market for the rest of 2022

As we turn the corner into the last half of the year the housing market is beginning to shift into a more even playing field. This can be promising for buyers who may be discouraged by the recent rise in mortgage rates.

Many experts are forecasting that home prices will continue to increase but at a much slower pace than we saw over the last two years. They are expected to come back down to a normal rate of increase that we saw before the pandemic began. Instead of a 15% price increase numbers are expected to come back down to about 3 to 4%.

Mortgage rates are expected to increase as well and even though mortgage rates are much higher than they were just a year ago they are still not as high as they have been. It is said that mortgage rates are hitting more of a historic normal range.

Why you should purchase a home now instead of waiting

The best time to buy a home really ultimately depends upon your personal financial situation but if you have the ability to purchase a home within your financial means right now it is better to do so than to wait. This is because home prices are only expected to increase and mortgage rates are expected to rise as well

So even if you feel like having a more even playing field and not purchasing in a seller's market would be best, it  is always better to benefit from a lower home price and a lower interest rate. One thing is for sure home price deflation is not expected on the horizon. But of course, no one can 100% predict the future.

For more information on purchasing a home in Boston please contact us anytime.