Why Today’s Housing Market is Actually a Bargain
Despite the steady increase in home prices pointing to the contrary, there are still some On-The-Fence Buyers who want to, “wait for prices to come down and interest rates to drop again” before making a purchase.
While they’re at it, they can add waiting for pigs to fly and the Padres to win the World Series to the list. (Just kidding, ignore this sour Cubs fan. 😊)
The reality is, the majority of our industry expects neither home prices nor interest rates to drop anytime soon.
In fact, homes prices are expected to increase by 5.2% in 2022 and rates are expected to climb to 3.55% by Q3 next year (*sources below).
Buyers who have purchased recently can look back and feel like they got a real bargain compared to today’s environment. And there’s a good chance the same can be said 12 months from now versus today. Here’s how it looks:
Main takeaway — assuming a 5.2% price increase on a home that’s worth $650,000 today and applying the 2022 estimated interest rate of 3.55%, we see that a buyer today gets a “bargain” of $33,800 off the sales price and a monthly payment that’s $317 lower than they’d have in 2022.
It can be challenging for real estate agents and lenders to not sound pushy or salesy or just after a commission, even when we really want what’s best for the clients. Urging them to make the move now when they’re not 100% ready can be a fine line to walk, even when we have this data to show they’re better off not waiting.
But hopefully by conveying this concept, it shows that even though it might feel like a stretch today, they’ll look back and see that they really got a steal compared to how things will look in 12 months.
If you have any questions or thoughts to share, I’d love to hear them!
