Mortgage Rates Could Hit 8.8%. Should You Buy Right Now?
Buying a home is always nerve-racking, but those looking purchase right now have even more reasons to fret: the Federal Reserve has been raising interest rates steadily for more than a year, meaning that those looking to get a mortgage are likely looking at a rate they aren’t going to like. The Federal Reserve Bank of New York just published the results of the 2023 edition of the Survey of Consumer Expectations Housing Survey, giving a snapshot of the housing market and how consumers are faring in it.
For help figuring out whether the time is right for you to buy a home, consider matching for free with a vetted financial advisor.
What Home Buyers Are Thinking
Among the most striking findings from the survey is that Americans have tempered their hopes for how much the value of their home will grow over the next year, dipping to 2.6% from 7.0%. Not only is that a precipitous drop, but it’s actually the lowest home price growth expectations recorded since this survey began in 2014.
Just over 68% of respondents felt that buying property in their zip code was either a “very good” or “somewhat good” investment, which is slightly below the numbers for the past few years but still above the optimism levels pre-pandemic.
Potential homebuyers don’t think they’ll be getting a good mortgage rate in the coming years. People expect mortgage rates to rise to 8.4% in a year and to 8.8% in three years.
The dream of owning a home still feels difficult for those that are currently renting, though, with respondents who rent placing their probability of owning a home at 44.4% on average — a slight uptick from 2022 but still below the rates of above 50% reported between 2015 and 2021.
Is It a Good Time to Buy a Home?
With all this in mind, many people may be wondering if now is a good time to buy a home. The answer, as with most financial queries, is that it depends on your situation.
Clearly, mortgage rates are high right now. That generally isn’t a sign that it’s a great market for home buyers. If, like many people in this study, you think mortgage rates are going to continue to rise, it could make sense to lock in a relatively favorable rate now.
It also depends on the strength of the market where you live. If you’re wondering if you’re in a good position to buy a home, consider consulting with a financial advisor.
The Bottom Line
A recent study from the Federal Reserve Bank of New York shows that Americans think mortgages are going to keep going up while they’ve tempered their expectations of the increase in home values. Renters, meanwhile, are less sure than in recent years that they’ll be able to purchase their own place someday.
Home Buying Tips
Buying a home is a major financial decision, so it probably makes sense to get help before you make any decisions. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When figuring out if you can buy a home, don’t forget about closing costs!
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