Did you know that the average cost of a U.S. home increased by 48.55 percent in the last ten years? As for the future of home prices, it’s looking to rise at nearly the exact same rate in the next decade.
Buying a home right now seems like a major hassle. Low mortgage rates, a shrinking inventory, and high home prices are becoming a major source of frustration for potential homebuyers.
Still, should people just give up when there are so many benefits to homeownership? Before we answer that, let’s discuss this home price surge and where things are looking to go as time progresses.
The Future of Home Prices
Unfortunately, home prices are not looking to drop too significantly. In fact, home prices in 2022 will likely be up around 16 percent.
When mortgage rates began to lower in 2019 and 2020, people felt a renewed sense of energy to buy a new home. While that may have made some people ecstatic, it was inevitable that the housing inventory wouldn’t be able to match the demand for too long.
Moreover, simple supply and demand played a big role in this price surge. While the availability of homes is limited, the demand isn’t dropping at all. And the more rare homes are, the higher the value.
Simply put, as long as these trends in real estate continue, home prices will only increase from here.
Will These Trends Slow Down?
The future of real estate is up in the air. As such, it’s hard to say whether the trends causing high home pricing will slow down or not.
Some changes are taking place. Recently there were some small improvements in housing inventory, which could be helpful in meeting the housing demand.
There may be a slight reduction in demand taking place, and many potential homebuyers are gawking at higher prices, causing some homes to receive few offers.
Finally, there is a projected rise in mortgage rates and refinance rates, which could cool things down a little. However, all of this is currently in a “possible” range. Only time will tell if any of these trends are gonna slow down.
Regardless, it is unlikely that buying a home is going to become much cheaper.
Why You Should Still Look Into Buying
Regardless of all of these admittedly daunting issues, you still shouldn’t completely bow out of buying a home. Yes, housing prices are getting higher. But unfortunately, so is rent.
Rents rates are now at their highest ever, with an 8.3 percent increase in July compared to last year. Meanwhile, mortgage rates are still currently low, and those monthly payments are typically lower than rent payments.
Furthermore, mortgage rates don’t rise. You can budget accordingly knowing how much you’ll have to pay for 20 or 30 years. Meanwhile, rent rates change, and right now they are on the rise at a level that doesn’t look like it will stop.
This isn’t an ideal buyers’ market, but it is still a good time to buy. And when your choice is between a predictable mortgage or an ever-changing and ever-increasing rent rate, the right move isn’t too hard to make.
Finding A Home In These Times
So even with home prices at a substantial high, it is a much better choice to pursue purchasing than dealing with the increasing rent rates. Over time, buying a home has proven to be the smartest choice financially, as you’re making an investment that can last a lifetime.
When you’re ready to start this process, it doesn’t have to be hard with a good real estate agent helping you, using their inside knowledge of the market to find a home that checks your boxes and fits your budget.
The Lafayette Team has over 20 years of combined experience in real estate. We help both buyers and sellers meet their needs, no matter your circumstances. Contact us today to learn more about our services.