Example: We are steadily approaching my favorite time of year in Wisconsin, beautiful, crisp fall nights. I can't wait. 

I have been thinking about and researching this topic for a few weeks now, as I wanted to make sure I had adequate support for the following statements – it may be a bit technical/nerdy, but I truly believe it is important to understand. I do believe this concept is the most important to understand for a homebuyer in 2023:

I truly believe that TODAY is the most affordable time to buy a home in Wisconsin, compared to forecasts I'm seeing for the next 5 years. I know you can't drop a statement like that without some support, so here we go:

1. There is no guarantee rates will go down. I’ll spare you the nitty-gritty here, but it is entirely likely that the “new normal” mortgage rate could be around 6-6.5%. Pre-pandemic rates averaged around 5-6%, at least since 2000. Our "new normal" rate could very well be 6.5%. If you want to read more (nerd alert), you can read this article here: (Calculated Risk Article). And here: (Lawler)

2. The media loves to scare people, so here's a headline you aren't likely to see (that is entirely true): "Housing is slightly less affordable than it has been over the last few years, but historically speaking, is marginally above the average affordability rate." (if the line in the chart below goes higher, then the market is less affordable). A measurement of 1 means the average income can afford the average house, if the measurement is higher, then fewer people can afford average priced housing.

Yes, housing is less affordable today than it was over the last few years, but historically speaking, we aren’t that far off from average affordability looking all the way back to 1972. (we aren’t in an “unsustainable” crisis that will need to correct, or a “house of cards” waiting to collapse). Wages have increased over time to mostly match house price and payment increases. Affordability is measured comparing average household income vs. average mortgage payments in a particular market. The market has been in this place before, a few times.

3. The “most expensive” choice to make right now is to not buy, if “waiting for a better opportunity” is the only other reason to wait – there are plenty of other valid reasons why you’d rather not buy a house, for example: moving within the next 3 years, don’t want responsibility/hassle of owning property, etc. If you do choose to wait to buy: what are you missing out on?

• $750/month in appreciation (for an average Milwaukee property. 3% appreciation per year on a $300,000 home is $9,000 annual). 109 Economists were recently surveyed and predict 13.4% national annual appreciation. Wisconsin is expected to beat the national average.
• $260.41/month in equity building (mortgage amortization for a typical first time homebuyer mortgage loan). This is the average monthly portion of a mortgage payment that pays down the mortgage balance.
• Don’t forget: you can lock in a house price today, and refinance later (if that is available). If you wait to buy until rates drop, then you’ll have more competition to battle with.

If you believe house prices will come down, there will need to be a “reason”. We have so much pent-up buyer demand over the last few years, if there is a single, momentary weakness in buyer demand and prices start to drop, that will bring all the “buyers out of the cracks”. What massive shift could possibly happen in the market that would be big enough to cause prices to fall? Will builders start building new, more affordable homes? Will people fall behind on their mortgage payments and cause a foreclosure crisis? If enough foreclosures hit the market, as they did in 2008, then that would cause a drag on property values as severely discounted properties start hitting the market. I don’t believe these things will happen for the following reasons:

• Mortgage delinquencies are at an all-time low.
• ~42% of homes are un-mortgaged (owned free and clear), so not at risk of foreclosure
• Among those who do have mortgages, their average equity is 52%.
• Builders have slowed down new construction

I know this was a lot. But I do believe it is the #1 most important concept for a homebuyer in 2023 to understand. Questions? Text me at 414-488-0438