What experts and economists think:
The average 30-year fixed mortgage rate hit 8% last week in the United States, the highest level since 2000. Rising interest rates have slowed home sales, but analysts insist any time is a good time. to buy a house.
The reasons they give are varied, they require a certain dose of imagination and money in the bank account. “The best time to buy a home is when you find one you would stay in for a long time and can afford,” David Meyer, vice president of analytics at investment platform BiggerPockets, told Business Insider.
Experts agree that this is the best option. “If you stay in that house for a long time, its value will increase,” justifies Daryl Fairweather, chief economist at Redfin. Not everyone can take this step.
The high cost of borrowing is the reason why mortgage affordability in the US is at its lowest level since 1989, according to the National Association of Realtors (NAR).
For the housing market to return to pre-pandemic levels of affordability, Americans’ incomes would have to increase by 55%, Andy Walden, vice president of business research at ICE Mortgage Technology, told CNBC.
The most optimistic predict that the Federal Reserve (FED) will reduce interest rates in the second half of 2024, a development that would likely lead to modestly lower mortgage rates. But waiting for that moment could be a mistake.
“The moment that happens, buyers will rush back into the market and we will see a return to bidding wars,” Fairweather says. This could reduce buyers’ options to get the home of their dreams.
For those who have enough resources to afford the purchase of a home, experts recommend setting a high interest rate now and refinancing to a lower one in the future.
Although a fall in interest rates is not expected to be very notable. Nor do mortgage rates return to the near-zero levels they had in 2022. Analyst forecasts for the next 18 months point to a reduction in mortgage expenses from the current 8% to less than 7%, such perhaps even close to 6%.
It is more difficult to guess whether the salaries of potential buyers will rise so that they can start looking for housing. “It’s very difficult to time the market, especially given expectations of high mortgage rates and continued home price appreciation,” notes Selma Hepp, chief economist at real estate data provider CoreLogic.
The variables are so many and so uncertain that renting remains the best financial decision for many Americans. Although history tells us that homes have always appreciated over time, consumers should only make a purchase when they can easily afford their monthly mortgage payment.