Fannie Mae released their latest Home Purchasing Sentiment Index last week which revealed that 79% of consumers believe now is a bad time to buy a home. Why? Fannie said “These results suggest that increased mortgage rates, high home prices, and inflation will continue to squeeze would-be homebuyers.” Plus, Fannie believes there will be future homes sold in the second half of this year and next year due to the Lock-In Effect which will keep homeowners locked into their current home because of their mortgage rate in the 2’s or low 3’s.
So, how should we respond to the idea that now is a bad time to buy a home? Here are some of my thoughts—
· Compared to the last 2 years when mortgage rates were 3.50% or lower, yes now is not a good time to buy. However, its incredibly unlikely we will ever see rates like that again. Thus, we need to expect mortgage rates over 4% for many years I expect. We can’t wait for the “good “ol days” to return. And we can’t change our past, we can only change our present and future.
· Second, today’s homebuyers will most likely get a great opportunity to lower their mortgage rate into the 4’s during the next recession which is probably coming in the next 6-18 months. We often can refinance our mortgage and lower our payment.
· But, we can’t refinance our home purchase to a lower price in the future. The only way to buy your new home at a lower price is to BUY TODAY. And metro Denver home prices have increased during 4 of the last 5 recessions. Thus, a lower home price is NOT COMING!
· Rent is soaring too up over 10% annually as demand continues to soar with millions of young adults coming of age and wanting to start their own households and developers can’t build new apartments fast enough. The ONLY WAY TO LOCK IN YOUR HOUSING COST is buying a home.