The Biggest Opportunity for Homebuyers This Spring

If you’re thinking of buying a home this season, the biggest opportunity you have right now is to get ahead of rising mortgage rates and increasing prices. Here’s what you need to know about where both are headed.

What’s Going To Happen With Mortgage Rates?

Mortgage interest rates are already climbing this year, and experts agree they’ll continue rising as we move through 2022.

Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), discusses how rising rates are motivating today’s buyers to move quickly. She also stresses that, even despite rising rates, buying a home today is still a great investment:

“...buyers are rushing to lock in lower rates as the outlook is for even higher mortgage rates in the following months....even with this increase in rates, purchasing a home is a great investment. In addition to the other benefits of homeownership, the equity that homebuyers will build in 2022 due to price appreciation will be higher than their mortgage payment.”

So, what does that mean for you? The big takeaway is that rates are expected to continue to rise. That means it’s going to cost more to buy a home if you wait. If you’re planning a home purchase sometime this year or next, but you’re waiting to see if rates will drop, it’s time to start working with your trusted advisor. This way, you’ll have an expert to help you plan for your purchase sooner rather than later.

And, as Evangelou notes, once you do buy a home, you’ll start building equity as home values rise. That should give you confidence your investment is a sound one.

What Will Happen With Home Prices This Year?

In addition, home prices are expected to continue climbing. The graph below shows the 2022 home price forecasts from six industry leaders. As the bars indicate, they’re all projecting an increase in prices this year as buyers competing for a limited number of houses continue to put upward pressure on prices. The dotted line represents the average of all the forecasts together, showing the rate of appreciation is expected to be about 6.1%.

While that’s not the record-breaking increase we saw over the past year, its still continued price growth – not a decline. Why is that important to you? If you’re waiting for prices to drop because you think homes will be more affordable in a few years, the data from leading experts simply doesn’t support it.

Bottom Line

If you’re ready to buy a home, you have a great opportunity to get ahead of the curve by purchasing before rates and prices climb higher. If you can, buying sooner rather than later may make the most financial sense.