If you're considering purchasing a home this year, you're likely closely monitoring the housing market through various channels such as news, social media, and conversations with your real estate agent, friends, and family. The focus is often on key factors like home prices and mortgage rates.
Consider these essential questions in making your decision, supported by data to help you navigate through the information overload.
1. What are my predictions for the direction of home prices?
For reliable information regarding home price forecasts, you can consult the Home Price Expectations Survey conducted by Fannie Mae. This survey comprises insights from over a hundred economists, real estate experts, and professionals in investment and market strategy.
As per the latest update, industry experts anticipate a sustained increase in home prices, extending at least through 2028 (refer to the graph below):
Hence, why is this relevant to you? Although the percentage of appreciation might not be as substantial as in previous years, the key emphasis lies in the survey's projection that prices are anticipated to ascend, not decline, for a minimum of the next five years.
With the gradual increase in home prices, even at a more restrained rate, there's positive news not only for the real estate market but for you as well. Purchasing a home now implies that its value is likely to appreciate over time, resulting in the accumulation of home equity in the years ahead. On the other hand, delaying the purchase, according to these projections, could mean a higher cost for the same home in the future.
2. What is my projection for the direction of the mortgage rates?
In the previous year, mortgage rates experienced an increase due to economic uncertainty and inflation concerns. However, there is a positive development on the horizon for both the market and mortgage rates. The moderation of inflation is a significant and encouraging factor, particularly for those considering purchasing a home. Here's why this development holds substantial importance in the current real estate landscape.
As inflation eases, there is typically a corresponding decline in mortgage rates, as observed in recent weeks. The recent announcement from the Federal Reserve, indicating a pause in Federal Funds Rate increases and the potential for rate cuts in 2024, has further bolstered experts' confidence in the likelihood of mortgage rates decreasing.
Danielle Hale, Chief Economist at Realtor.com, provides an explanation:
“. . . mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer. . . . a key factor in starting to provide affordability relief to homebuyers.”
According to an article by the National Association of Realtors (NAR):
“Mortgage rates likely have peaked and are now falling from their recent high of nearly 8%. . . . This likely will improve housing affordability and entice more home buyers to return to the market . . .”
The future direction of mortgage rates remains uncertain, as predicting their trajectory with absolute certainty is challenging. However, the recent decrease and the Federal Reserve's decision to halt rate increases suggest a hopeful outlook. Although occasional volatility may be experienced, the ongoing easing of rates is anticipated to enhance affordability in the market.
Considering purchasing a home? It's crucial to understand the dynamics of home prices and mortgage rates. While predicting their exact trajectory is challenging, staying informed with the latest updates empowers you to make well-informed decisions. Connect with us TODAY to stay current on developments!
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