Buying a home is a big decision that depends on many factors, such as your financial situation, your preferences, and the market conditions.
While it is true that mortgage rates are high today, there may be some benefits to purchasing a home now versus waiting for the rates to go down. Here are some possible benefits:
- You can take advantage of the low inventory of homes for sale. According to the National Association of Realtors, the inventory of existing homes for sale in the US was at 1.9 months in August 2023, which means it would take less than two months to sell all the available homes at the current sales pace. This is the lowest level since the data series began in 1999. A low inventory means that there is more demand than supply for homes, which can drive up prices and create a seller’s market. If you buy a house now, you may be able to avoid paying higher prices in the future or competing with other buyers for limited options.
- You can benefit from the appreciation of your home value. Home prices have been rising steadily in the US for the past decade, reaching a record high of $363,300 for the median existing-home price in August 2023. This is an increase of 14.9% from August 2022. Home prices are expected to continue to rise in the coming years, as demand remains strong and supply remains tight. If you buy a house now, you may be able to enjoy the appreciation of your home value over time, which can increase your net worth and equity.
- You can enjoy the tax benefits of homeownership. Homeowners can deduct the interest paid on their mortgage from their taxable income, which can lower their tax bill and increase their cash flow. Homeowners can also deduct property taxes and mortgage insurance premiums from their income taxes, as well as claim tax credits for certain home improvements or energy-efficient upgrades. These tax benefits can make homeownership more affordable and attractive than renting.
- Refinance your loan if or when interest rates go down. Typically, if a future interest rate drops 1% or more, below your current interest rate, it may be time to refinance your loan. Lowering your interest rate will help reduce your monthly mortgage payment obligation.
If you would like to learn more you can contact me here, or call me at 972-996-1973.
Sources:
[How Interest Rates Affect Home Prices], Investopedia, September 2023
[What Is Home Equity?], Bankrate, August 2023
[How to Buy a House in a High Interest Rate Environment], The Balance, July 2023
[Fixed-Rate Mortgage vs. Adjustable-Rate Mortgage: Which Is Right for You?], NerdWallet, June 2023