What Buyers Can Expect With Prices and Rates
What the experts have to say about the future of home prices.
Where do I think home prices are heading? Do I think home prices will go up or down? How do things look in the short term compared to the long term? Today, I’ll answer these questions and explain what homebuyers in Washington D.C. need to be asking themselves.
First, experts are predicting home price appreciation in 2023, although it will be nothing like what we saw in 2022. Once we see mortgage rates start to decline, we will see home prices start increasing.
When it comes to where interest rates are heading, no one has a definitive answer, but what matters is your mindset around it. If you believe that mortgage rates will only go up from here, it's not going to become more affordable to buy a house.
"Prices will likely appreciate in 2023."
I believe that mortgage rates may get a little higher before they go down. They will fall once inflation is under control, but that will happen pretty slowly. I think the important thing for homebuyers to keep in mind is that once we see rates start to come down, prices are going to go up, and the price that you pay for a home is the price that it is for the entire length of your mortgage loan. If you put 20% down for a mortgage, you have an 80% loan. That loan amount is never going up once you close. Instead, it will decrease with every mortgage payment you make.
In contrast, the thing that isn’t permanent is your rate. Once interest rates go down, you'll be able to refinance. Rates may go up or down, but prices are only going up. As a result, it might make sense to purchase a home as soon as possible. That way you can get in on a lower price and refinance whenever rates eventually fall.
After all, we know what to expect with rental prices. With inflation, I think we will continue to see rents go up, which will increase the amount of money you're paying each month for housing one way or another. You might as well increase your equity with each mortgage payment instead of someone else’s.
If you have questions about today’s topic or anything else, please call or email me. I’d love to speak with you!