Should I buy a home now or should I wait for the market to cool a bit? This is a question that I am frequently asked by buyers. It is a valid question and one that should be considered. What has happened to the market, if you have been looking for the last six months, in Northern Colorado?
In the last six months interest rates have gone up nearly 2 points. Also prices have gone up 7 to 9 percent. That means that you’re buying power is significantly diminished. In January and into February of 2022 interest rates were between 3% and 3.5%. Now that same buyer is looking at interest rates at 5.375% to 5.5%. That means the payment for a house priced at $425,000 has potentially gone up $110 per hundred thousand. That can mean a house payment going from approximately $1750 to $2200. That makes a heck of a difference! This does not take into account the increase in prices that we have been seeing and how that would impact your payment.
Why Move Now?
Buyers that are in a position to make a move right now are encouraged to do so. Interest rates are rising and are projected to continue that trend throughout 2022. With interest rates creeping up and property values continuing to climb, waiting can cost you money. It may just price you out of the market. Low interest rates and rising home values make for an opportunity. Since 1988 rent has increased at a rate of 3.5% per year, according to the National Association of Realtors. If you owned a home, priced at $425,000, after 5 years of ownership you will likely have over $165,000 in equity. If you are paying rent, on that same home every month you are not earning $165,000, instead your landlord is.
Should I Buy A Home Now: Supply and Demand
In Northern Colorado the demand continues to outpace supply. This is supply and demand. Too many buyers, plus not enough homes, equals rising home prices. It is a good idea to take this time, make a plan and budget for a purchase. Meet with a recommended lender and verify that your credit is clean and you are ready to buy. Do an application and lock your rate now. Bottom line is that interest rates are going up, they could come down some but home prices will continue to rise.
Contact us today if you have questions or if you are ready to begin the home buying process.