The cost of homeownership is rising but the question is, should you buy? The answer is in the history of rates and the current post-pandemic factors that are affecting the market.
Covid-19 affected more than just a sense of well-being and the economy, it was a major change to daily behaviors, introducing remote work to many for the first time. The disruption to operations coupled with the movement of labor workers to online careers inevitably limited the supply of goods and raised labor costs as companies struggled to keep up. Like a domino; goods, property taxes, insurance costs, interest rates and rent rise.
To soften Covid's impact, mortgage rates were intentionally pulled to their all-time low of 2.68% in December of 2020. The Federal Reserve reduced borrowing costs, allowing lenders access to funds needed to drop interest rates. Now recovering from the pandemic, rates are rising back to a normal level and will continue to rise alongside inflation. Before Covid-19, the average interest rates were nearly double that of 2022. Rates reached up to 16.63% in the 1980s. Still relatively low compared to other financial rates such as credit cards, payday loans, furniture, and former home interest rates, homeownership is still considered a wise investment.
Predictions that rent prices will accelerate and the pivotal shift in home needs have caused a market unlike ever before. For first-time homebuyers, now is the time to buy. Inflation will continue to raise prices; however, new incentives and custom loan programs can make homebuying more affordable than renting. Appreciation could provide additional savings as home values are anticipated to increase.
Buying has benefits past the ability to modify a home to your lifestyle. Get a secure investment that will last through the volatile years to come and build equity in the process. You might be able to afford more than you expect. Don’t settle for less, contact us today.