One of the many lessons learned from the pandemic is that home is not just a commodity. It’s a place of respite, renewal and where family memories are established. For some, it remains their primary workplace. How quickly we forget some lessons and fuel unrealistic expectations.
Though the news of rising mortgage interest rates and increasing home prices remain a concern for buyers, especially first-time home buyers, 2023 has ushered in a return to realistic mortgage rates for years to come. Rising interest rates have dominated the news. Few reports, however, remind people that rates remain below the historical 50 year average of 8%. In 2021, we reached the historic bottom rate of 2.5%. One thing is certain: rates change and we cannot expect them to return to 2.5% anytime soon, and possibly not again in this lifetime.
It’s important for home buyers to view the current, local market data and recognize that not all news is negative when considering a home purchase. Though home prices will continue to rise locally, rent prices will also continue to rise and purchasing a home remains a solid investment. Historical data shows those who own homes accumulate more wealth than those who don’t. Money invested in the stock market may go down, but your home appreciates in value over the long-term. Building equity in your home increases your overall net worth, and your home is the best hedge against inflation.
Be sure to understand the hyperlocal market when making an offer. A local REALTOR can secure accurate data on the neighborhood — things like average days on market for that zip code and neighborhood, average cost per above-grade square foot, and whether the price falls in the high, middle or low end of the neighborhood. This is vital to negotiations and to your potential future value in the home.