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Buying a House? Do it Now While Rates Are Still High
If you’re considering buying a house, now is the time to make your move, even though interest rates are still relatively high. Counterintuitive? Yes, but there’s a logical reason why it makes sense to buy before rates fall further.
The Current State of the Housing Market
Let’s look at what’s going on in housing right now. Inventory is very low while housing starts are about average despite the inventory shortage. This tells us that the limited supply we have now is likely all we’ll have for some time.
And here’s the key thing: when interest rates drop, home prices will shoot upwards again because of increased demand. We’ve seen this movie before – think beanie babies, cabbage patch kids, concert tickets. When supply is limited but demand surges, prices skyrocket.
So if you wait for lower rates to buy, you’ll end up paying much more for the home itself to offset the rate savings. It’s basic economics.
Think in Terms of Rent
An interesting way to think about buying a home is to see mortgage interest as the “rent” you pay to borrow money to buy the house. This rental rate will only go down in the future as you refinance at lower rates.
However, the rental cost of actually occupying the home (the price you pay) will continue rising. So lock in at today’s elevated rental rate for the money, before the price rental skyrockets!
The Math Favors Buying Now
Crunching the numbers, it’s clear buying now, even at a higher interest rate, comes out ahead of waiting. As rates decline, the difference between owning and renting will expand even further.
The bottom line is that buying a home while rates are still comparatively high could save you money in the long run. The mortgage interest rate you secure now is likely the highest you’ll ever pay.
So take advantage of today’s rates and prices before the math shifts further out of favor for buyers. Then refinance down the road as rates drop. Get the conversation started with your real estate agent now – closings by Valentine’s Day are a real possibility if you move quickly!
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