Are you waiting to buy a home until prices go down?
September 27, 2021
If you’re a homebuyer thinking you might be better off waiting for housing prices to come down, think again. According to Ideal Homes & Neighborhoods preferred lenders, prices won’t go down; they’re no longer climbing at a rapid pace, but prices will continue to climb over time.
According to Alex Hawkins, credit consultant for C Solutions (a preferred lender for Ideal Homes & Neighborhoods), even prices are not likely to go down in the future. “The good news for buyers right now, however, is that interest rates are at historic lows,” says Hawkins. But as the U.S. economy continues to recover, the Federal Reserve will most likely raise interest rates in the future. “Waiting to buy could mean taking a chance of financing at a higher interest rate, which usually means bigger monthly payments,” says Hawkins.
In many cases, interest rates can affect monthly payments more significantly than the home’s purchase price. For example, if you buy your dream home today for $350,000 with an interest rate of 2.5 percent, your monthly payment would be $1,382. But, what if you take a wait-and-see position and the home’s price drops to $300,000? That’s a win. If, however, interest rates have taken a small hike and you lock in an interest rate of 4.5 percent, that little 2 percent of additional interest means your monthly payment on a $300,000 house jumps to $1,520.
$350,000 home at 2.5% interest = $1,382 per month
$300,000 home at 4.5% interest = $1,520 per month
*Payments are estimated and may not include taxes, homeowners insurance, or mortgage insurance, and are dependent upon loan type and credit.
Labor shortages and rising materials costs caused by the pandemic have caused a shortage in homes available for purchase. A buyer’s best option to avoid getting into a bidding war is to purchase a new home or build a new custom home.
By designing and building a custom home, the buyer has more control over the final price based on choices put into the new home. And, because construction is new and warrantied, the buyer has fewer unexpected expenses associated with previously owned homes. These are two particularly good reasons for considering a new build.
Homeownership in Oklahoma is still very affordable compared to similar states, and the median home price is still among the lowest in the nation. If you’re thinking of buying a home in Oklahoma, now could be a great time to act.
If you decide to build new, Ideal Homes & Neighborhoods also offers an industry-leading $4,000 towards closing costs when buyers choose to finance with a preferred lender.
Norada Real Estate Investments