Last Updated on August 4, 2021 by Maggie Looker
If you have spent this summer looking to take the first or next steps in homeownership, you are well aware of how challenging it can be. The lack of houses for sale compared to the large number of home buyers has made for quite the competitive real estate market. Perhaps you have been a witness to the crazy bidding wars that have drive home purchase prices above asking prices. All these factors combined create a misperception that now is not a good time to buy a new house.
The truth is, if you remain committed to finding your new home this year, your patience and perseverance will pay off through financial gains over the next few months. Here are three reasons why the remaining months of 2021 might be the best window of opportunity for you to get into your new home this year.
1. Interest Rates Remain at Historic Lows
The long-term affordability of homeownership has been driven by historically low interest rates on mortgages over the past 16 months. And although current interest rates remain extremely low, we have started to see rates begin to inch up. The four major forecasters in the real estate industry expect interest rates to increase from 3.17% to 3.57% on average over the next year. Meaning that the savings from low interest rates we are experiencing right now will likely not be around next year.
Source: Keeping Current Matters
Home buyers who decide to wait to try their luck at getting into their new house until next year will pay more over the life of their loan due to these increasing interest rates. All other factors equal, that 0.4% increase on a $250,000 home loan will cause a homeowner to pay an estimated $50 more every month on their mortgage payment. That comes out to approximately $20,000 more over the life of a 30-year loan. If you’re prepared to step into homeownership, today’s interest rates are going to provide you the most savings.
2. Expecting More Homes for Sale This Fall
The lack of homes for sale is the single factor that has created the most frustration for home buyers this year. The lack of homes for sale combined with the large number of home buyers has caused homes to sell before they even hit the market. And for homes that have been able to hit the market, competing offers have driven their purchase price well above their listing price.
However, the number of homes hitting the market has already started, and will continue, to increase the remainder of 2021. This will not only give home buyers the opportunity to be more patient and find a home that meets their search criteria, but more houses for sale will tamper the crazy bidding wars and save home buyers money.
3. Competition Will Likely Decrease
The seasonality within the real estate market has traditionally led to home buyer demand peaking during the spring and summer months. Home prices also will always increase along with demand. And although the real estate market is expected to remain hyper-competitive through the remainder of the year, past trends suggest that competition will decrease through the remaining months of 2021.
Buyers frustrated by the market will naturally leave and try their luck again next year. Some buyers will lose focus and get distracted by their kids going back to school and preparing for the holidays. And many other buyers, especially in colder regions, will simply not want to deal with moving during the winter months. This is where your patience and perseverance creates your opportunity. With competing home buyers leaving the market, combined with increasing inventory and low interest rates, the best time to get into your new home is likely to be before the calendar turns to 2022.
Buyers that stay 100% committed to finding their new home this year, especially current homeowners, will capitalize on an opportunity others will likely not see again next year. Conditions look to ease up and make finding your new home easier, while also still putting you in a great financial situation for years to come.
Even if you aren’t seeing the changes in your local market yet, now is the time to start having conversations with your local Homes for Heroes specialists. Working together, your Homes for Heroes real estate and mortgage specialist will make sure you have your financials in order. Then, they’ll keep you ahead of competing home buyers, preparing you to get into your new home when conditions change.
When our Homes for Heroes specialists get you into your new home, you will receive extraordinary savings too. Let Homes for Heroes help you get started on your path to your new home and Hero Rewards from Homes for Heroes by connecting you to our local specialists!