If you're considering the purchase of a home, it's likely that you're paying close attention to everything you hear about the housing market. You gather information from various sources such as the news, social media, your real estate agent, conversations with friends and family, and even chance encounters with discussions at the local supermarket. Home prices and mortgage rates are probably topics that come up frequently in these conversations.

To help you cut through the noise and focus on the most crucial information, let's examine the top two questions you should ask yourself regarding home prices and mortgage rates as you make your decision:

1. Where Do I Think Home Prices Are Heading?

An excellent resource for this information is the Home Price Expectation Survey (HPES) conducted by Pulsenomics. This survey involves a national panel of more than one hundred economists, real estate experts, investment professionals, and market strategists.

According to the latest survey results, the experts project a slight depreciation in home prices this year (indicated by the red in the graph below). However, it's essential to consider the context. The most significant declines in home prices are already behind us, and prices are now appreciating in many markets. Furthermore, the small 0.37% depreciation forecasted by HPES for 2023 is far from the severe crash that some initially predicted.

Looking ahead, the green in the graph indicates that prices have turned the corner and are expected to appreciate in 2024 and beyond. Following this year, the HPES predicts a return to more typical levels of home price appreciation for the next several years.

So, why is this significant for you? It implies that your home is likely to increase in value, allowing you to build home equity in the coming years, but only if you buy now. If you wait, based on these projections, the cost of the home will be higher later on.

2. Where Do I Think Mortgage Rates Are Heading?

Where Do I Think Mortgage Rates Are Headed? Over the past year, mortgage rates have risen due to economic uncertainties and inflation. However, recent reports indicate that inflation, although still elevated, has moderated from its peak. This is an encouraging sign for the market and mortgage rates. Here's why:

When inflation subsides, mortgage rates generally respond by declining. This is possibly why some experts suggest that mortgage rates will experience a slight pullback over the next few quarters, settling around an average of approximately 5.5% to 6%.

However, even the experts cannot predict mortgage rates with absolute certainty for the upcoming year or even the next month. Numerous factors can influence their direction. To provide you with a perspective on the potential outcomes, consider the following:

• If you buy now and mortgage rates don’t change: You made a good move since home prices are projected to grow with time, so at least you beat rising prices.

• If you buy now and mortgage rates fall (as projected): You probably still made a good decision because you got the house before home prices appreciated more. And, you can always refinance your home later on if rates are lower.

• If you buy now and mortgage rates rise: If this happens, you made a great decision because you bought before both the price of the home and the mortgage rate went up.

By considering these questions, you can gain insights into the potential outcomes and make an informed decision regarding the timing of your home purchase.

Bottom Line

If you’re thinking about buying a home, you need to know the facts on what’s happening with home prices and mortgage rates. While no one can say for certain where they’ll go, expert projections can give you powerful information to keep you informed. Let’s connect so you have a professional to add in an expert opinion on our local market.