In the ever-evolving landscape of the housing market, the past few years have been nothing short of a rollercoaster ride. From unprecedented surges in home values to soaring interest rates, homeowners and prospective buyers alike have found themselves navigating through uncharted territory.
Just a few years ago, home appreciation hovered comfortably around 5% annually. But fast forward to the present, and many homeowners who made their purchase in the last half-decade are witnessing their property values nearly double. It’s a staggering phenomenon, one that defies historical norms.
However, as interest rates begin their ascent once more, we’re witnessing a gradual return to a more familiar pace of appreciation. While this might come as a relief to some, the repercussions of this rapid appreciation are far-reaching, particularly for those looking to enter the housing market for the first time.
The catalysts behind this market anomaly are deeply rooted in the pandemic’s impact. Massive shifts in the job market, coupled with widespread business closures and disrupted supply chains, created a perfect storm. Add historically low interest rates to the mix, and suddenly, purchasing a home became more accessible than ever.
As the economy rebounds and pandemic restrictions ease, the demand for homes has skyrocketed, driving up their value. But with rising interest rates, affordability has taken a hit, leaving many aspiring homeowners struggling to keep pace.
For those who managed to secure homes during the golden era of low rates, the current landscape presents a stark contrast. With prices soaring and inventory dwindling, the dream of homeownership feels increasingly out of reach for many.
Enter the investors, capitalizing on this shifting landscape by snatching up properties for rental or flipping. With a keen eye on the future, they anticipate a surge in demand from Generation Z, poised to enter the housing market in the coming years.
Yet, amidst the chaos, there is hope. First-time homebuyers need not despair, as lending options tailored to their needs abound.
- There are lenders that work with first time home buyer programs that don’t require a buyer to put down 20% of the loan in cash. Not even 10%!
- Most often it is more like 3.5% and VA is 0% if you have served in the military or currently do.
- When you are budgeting what you should save up, be sure to research lending options like FHA, WHEDA, USDA, VA and find a lender that works with those programs, because not all do!
- It is a huge leg up and lets you put your cash to work to compete against other offers instead.
Moreover, strategic measures can safeguard one’s investment in homeownership.
If you are afraid of losing your $ss on purchasing a home, know that there are avenues to salvage your investment after purchasing:
- Watch mortgage rates and refinance your mortgage loan to a lower rate. Better yet, when you are shopping around for lenders before you buy, look for one that will offer you free refinancing if you use them again in the future.
- Make an extra loan payment once in a while (at least once a year) to greatly reduce the amount of interest you will pay over time. That’s more of your dollars coming back to you in home equity at the end of the loan term.
- Think before you buy, be sure you are asking your agent about resale value in that neighborhood. Be sure you are purchasing somewhere that people will always want to live.
- Keep the home in good repair and stay on top of maintenance and do quality updates.
- Keep in touch with an agent for advice now and then if you are thinking of remodeling projects. Agents know contractors and have good insights into what the market trends are for those types of updates and if they are truly adding value to your property or not.
Ultimately, the path to homeownership is paved with uncertainty, but also with promise. By arming oneself with knowledge and aligning with trusted partners, navigating the housing market becomes a manageable endeavor.
No one has a crystal ball into the future, but we DO have a big chunk of real estate history that proves owning property is always an investment no matter how bad the interest rates and home values look at the moment.
I purchased my first home for $125k back in 2000 and the interest rate I had was 12%! It was a VA loan with no PMI and no down payment, which saved me thousands right there.
I had to refinance twice to get my rate down to around 8%. After twenty years and a lot of mortgage payments at a high interest rate, I still got $70k to put in my bank when I sold. My home had appreciated in value and I had made a couple of these smart moves along the way.
As a renter, living under the landlord’s rule, I was lucky if I had one that didn’t try to make a case to keep my security deposit, getting back Zerooo when I moved.
Owning a home lets you live by your own rules, and that my friends, is priceless!!
If you’re ready to delve deeper into the realm of real estate or seek guidance on your housing journey, don’t hesitate to reach out. As a passionate advocate for informed decision-making, I’m here to help you chart a course that’s right for you.
Thank you for joining me on this exploration of real estate’s ever-evolving landscape. I eagerly await your feedback, insights, and questions as we continue this dialogue together.
Contact me at 920-390-9409 or via email at [email protected] to embark on your real estate odyssey today.
Your trusted guide, Tammy