The answer may not feel as “easy” as it has in the past! Rates aren’t historically low like they were, and there are still more buyers than sellers which means there are usually still bidding wars, even as property values continue to rise!

Let’s keep the decision more straightforward for you with a few simple questions:

1. How long are you going to stay in the home?

If it’s a super short-term decision, (less than 24 months) you may be better off renting! What if property values do fall in the near future and you feel “stuck”?

On the other hand: There has NEVER been a decade historically in the last 80 years within which property values went down. Over any 10-year period in history, property values may have dipped temporarily but they always went back up.

2. Can you afford the monthly payment TODAY, even if rates never do go down?

There is a lot of wisdom predicting that rates will go down to anywhere from 5-6.5%, which would really help people out! If you’d buy a house today, you could refinance if rates go down and lower your monthly payment by hundreds of dollars, potentially.

But, what if rates never go down?

3. Do you LIKE the home, do you LIKE the neighborhood?

Buying a home isn’t just an investment, it’s a lifestyle choice. Do you LOVE the home and neighborhood? Will you enjoy making memories there, even if you lose money on the purchase?

I do NOT believe homeowners over a 5+ period will lose money, but what if you do? Will it have been worth it?

4. Have you read the data about the housing market? 

Or have you just watched the news, which is designed to sell clicks and show you paid advertisements? I can quickly prepare a “housing report card” that shows the numbers of any particular county so you can see how much we expect values to rise, population to change, and the local housing market to prosper. 

When will rates finally come back down? (Warning this is a bit of a nerdy read!)

If you read what smart economists are saying, it is safe to predict mortgage rates will come down from where they're at currently (mid 7's%) to low 6's or even high 5's! (5.75-6.25%) as soon as the spring of 2025. Want to read a super nerdy article about it? Check this out!

Here is why:

You may have noticed banks are willing to pay higher rates of interest on your savings account and CD's (certificates of deposit). 

If you didn't know about this - you may consider opening a high yield savings account with an online bank who is offering rates of return around 4%+!

Not to mention US Treasury Bonds: The government is willing to borrow money from you and offer you a GUARANTEED rate of return around 5%! 

If banks are willing to pay you a high rate of interest for deposits, they'll need to charge consumers even more if they're lending out money for auto loans, credit cards, and mortgage loans. That's how they make money / stay in business! 

Why is this happening?

Inflation rose after COVID, and the Fed raised the Fed funds rate in response to this, in order to slow down the economy and cool down inflation. If the Fed raises the Fed Funds Rate (FFR) then it is more expensive for banks to borrow money from the Fed in order to lend it out for auto loans, credit cards, etc. if they need the money and don't have it already on hand.

There are many signs pointing to inflation going down, and staying down next year. If/When that happens, then the FFR will come down, treasury bill rates will come down, and mortgage rates will follow.

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Mortgage rates are very sensitive, and mostly tied to, how the 10-yr treasury bills are performing, so if treasure rates go down, so will mortgage rates.

Here's another big reason mortgage rates will eventually go down:

During COVID, the Fed was buying mortgages in the amount of billions of dollars per day(!!) in order to artificially lower mortgage rates. This was their way of stimulating the economy where they were able to.

Well, now that inflation has gone up so much, the Fed needs to reverse course and get rid of all of these mortgage bonds they bought. As they are selling off their supply, that is flooding the market with additional bonds and causing mortgage rates to go up. 

This will eventually slow down as well, and mortgage rates will breathe a sigh of relief and go down!

If you made it this far, congratulations! I know this was a heavier read, and if you have any questions at all, make sure to text me at 414-488-0438!