If you’re in the market for a new home, you know how overwhelming it can be to sift through the abundance of information available. From the news to social media, conversations with friends and family to your real estate agent’s advice, the sources seem endless. Among the sea of data, one thing stands out – the constant buzz about home prices and mortgage rates.

To help you cut through the noise and make an informed decision, let’s take a closer look at the data and address two vital questions: Where are home prices heading? And what about mortgage rates?

1. Where Do I Think Home Prices Are Heading?
To understand the trajectory of home prices, turning to a reliable source is essential. The Home Price Expectation Survey from Pulsenomics proves to be just that, as it involves a national panel of over one hundred economists, real estate experts, and market strategists. Their latest release shows projections of slight depreciation this year, which may raise some concerns (see red in the graph below). However, it’s crucial to contextualize this information. The worst of the home price declines is likely behind us, and many markets are already experiencing appreciation again. Notably, the small 0.37% depreciation predicted for 2023 is far from the crash some may have feared.

Looking ahead, the graph indicates a promising change – prices are expected to appreciate in 2024 and beyond (see green in the graph below). After this year, the Home Price Expectation Survey forecasts a return to more normal levels of home price appreciation for the next several years.

So, what does this mean for you? If you take action and buy now, your home is likely to grow in value, and you should gain home equity in the coming years. On the other hand, waiting could lead to higher costs down the road, considering these forecasts.

2. Where Do I Think Mortgage Rates Are Heading?
The past year witnessed rising mortgage rates due to economic uncertainty and inflation. However, there’s good news – inflation has moderated from its peak, which bodes well for the market and mortgage rates.

In general, when inflation cools down, mortgage rates tend to fall in response. Some experts suggest that mortgage rates will pull back slightly over the next few quarters, settling somewhere around 5.5% to 6% on average.

Nevertheless, predicting mortgage rates with absolute certainty is challenging, as numerous factors can influence their direction. To gain insight into the possible outcomes, consider the following scenarios:

• Buying now with no change in mortgage rates: This move is wise since home prices are projected to appreciate over time, and you’ll avoid the impact of rising prices.
• Buying now with falling mortgage rates (as projected): Even in this scenario, buying now can be a smart decision, as you’ll secure the home before prices appreciate further. Plus, if rates dip, you can always consider refinancing later.
• Buying now with rising mortgage rates: Surprisingly, this would still be a great decision, as you’d have purchased the property before both the home price and mortgage rates went up.

Bottom Line:
As you contemplate buying a home, understanding the dynamics of home prices and mortgage rates is crucial. While no one can predict the future with absolute certainty, expert projections can provide valuable insights to keep you informed. If you want a professional opinion on the local market, let’s connect and navigate this journey together. Stay informed, make informed decisions, and step confidently into your new home.