The Cost of Waiting to Buy a Home
Article published in Northampton Living
(May 2024)
Spring is here in New England, which means the real estate market is in full swing. If you are a potential buyer or seller, there are real challenges to face: high demand, low supply, rising home prices, and rising mortgage rates. I’m often asked by home shoppers whether to buy a home now or wait until the market changes. Let's examine the cost of delay.
Median Home Prices are Still on the Rise
Data from the Massachusetts Association of Realtors shows that from December 2019 to December 2023 median home prices rose from $291,750 to $410,000 for single-family homes in Hampshire County, at an average annual appreciation rate of 7.17%. Economists anticipate this trend will continue. Those who delay home purchase will likely face higher prices.
If home prices continue to increase, waiting to buy could also mean a higher mortgage payment for those who need financing. Purchasing as soon as it is feasible enables buyers to begin taking advantage of the current trend of increasing home values.
Mortgage Rates May Be Less Volatile
It’s important to note that while some perceive current mortgage rates as “high,” trends show they are closer to historical norms. Rates fluctuated between 5% and 15% from 1980 to 2010, hovered around 4 to 5% from 2010 to 2020, and only reached historic lows during some months of 2020 and 2021. Since mid-2022, 30-year, fixed mortgage rates have fluctuated between roughly 6 to 8.25%, according to Freddie Mac’s Primary Mortgage Market Survey. Waiting to buy may not lead to a lower mortgage payment.
First-Time Homebuyers Could Have an Advantage
First-time homebuyers entering a competitive market may benefit from programs like MassHousing's revamped down payment assistance, offering up to $30,000 to eligible borrowers. And the government-sponsored enterprises Freddie Mac and Fannie Mae also offer programs for first-time homebuyers who earn under 100% of area median income levels. These programs can allow eligible borrowers to receive lower interest rates.
Others Can Use Equity Wisely
If you already own a home and are looking to upsize, downsize or renovate, consider leveraging the equity in that home. Selling could offer a larger down payment on a new home in this market. Or retain your home and borrow against the equity for home renovations, debt consolidation, or to purchase another house or make other investments.
Entering today's housing market requires preparation. Educate yourself to make informed decisions. Patience and preparation coupled with an experienced team will guide you to the right homeownership opportunities.
Northampton Living is thrilled to welcome Lindsay Barron LaBonte as our new mortgage expert. Lindsay is happy to answer any mortgage-related questions at 413-586-5626 or appliedteam@harborone.com.