Why Now is the Time for Both Buyers and Sellers: A Look at Future Home Prices and Interest Rates

At BrightWork Realty, we're committed to helping all our clients make informed decisions. Whether you're looking to buy or sell a home, current market conditions present unique opportunities. Here's what you need to know:

For Potential Buyers: Why Now Is a Good Time to Purchase

Home Prices Are Expected to Rise

According to a recent Reuters poll of housing analysts, U.S. home prices are projected to increase:

• 5.4% rise expected in 2024
• 3.3% increase forecast for 2025
• 3.4% growth predicted for 2026

These increases outpace projected inflation rates, suggesting real estate remains a solid investment.

Interest Rates Are Likely to Fall

The Federal Reserve is expected to start cutting interest rates:

• Predictions suggest rate cuts could begin as early as September 17, 2024
• A total reduction of 75 basis points is anticipated by the end of the year
• 30-year mortgage rates are forecast to average 6.7% in 2024, dropping to 6.0% in 2025 and 5.9% in 2026

Lower interest rates mean more affordable mortgage payments, potentially offsetting rising home prices.

Why Buying Now Makes Sense

1. Beat the Price Increases: Secure a property before prices climb further.
2. Capitalize on Current Rates: While rates are expected to fall, they're still historically low.
3. Wider Selection: With many buyers waiting for lower rates, you may face less competition now.
4. Build Equity Faster: As prices rise, so does the value of your investment.

To illustrate the potential savings of buying now vs. waiting for rates to drop, we’ve put together the infographic below highlighting how waiting for the projected half-percentage drop in interest rates will actually cost you more. 

For Potential Sellers: Why Now Could Be the Right Time to List

Limited Supply Drives Demand

The current housing market is characterized by tight inventory:

• Existing home inventory levels are about 33% below pre-pandemic averages
• This scarcity is likely to continue supporting home prices

Your Home's Value Has Likely Increased

The real estate market has seen significant appreciation in recent years, making now a potentially excellent time to sell:

• Property prices are more than 50% higher than pre-pandemic levels, and you've likely seen substantial equity growth if you purchased your home before 2020. 
• Despite economic fluctuations, home prices have shown resilience. The S&P CoreLogic Case-Shiller index, a leading measure of U.S. residential real estate prices, suggests continued price appreciation in many markets.
• Home price increases are expected to outpace inflation in the coming years.
• Even with significant interest rate hikes, average property prices only fell about 7% from their peak. This demonstrates the strength and stability of the housing market.
• In many areas, home prices are still hitting record highs due to limited supply. This could mean that your home is currently at its peak value.

Locked-In Low Rates Create Opportunity

The current market presents a unique opportunity for sellers. Many homeowners are reluctant to sell due to their low pandemic-era mortgage rates, creating a "lock-in effect." This has significantly reduced inventory, now 33% below pre-pandemic levels. 

Consequently, sellers face less competition and often encounter motivated buyers despite higher current rates. This scarcity can lead to faster sales, better offers, and increased negotiation power. While giving up a low rate is a consideration, the benefits of selling in this market could outweigh the costs, especially with predictions of falling rates in the coming years (from 6.7% in 2024 to 5.9% in 2026).

Why Selling Now Could Be Advantageous

1. High Demand: Limited inventory means your property could attract multiple offers.
2. Peak Prices: Home prices are at or near record highs in many areas.
3. Less Competition: With many homeowners reluctant to sell, your property could stand out.
4. Leverage Your Equity: If you've owned your home for several years, you may have substantial equity to use for your next purchase.

Whether you're looking to buy or sell, current market conditions offer unique opportunities. For buyers, the prospect of rising prices coupled with potentially falling interest rates makes now an attractive time to enter the market. For sellers, limited inventory and high demand could lead to favorable selling conditions.

At BrightWork Realty, we're here to help you navigate these market conditions. Our experienced agents can guide you through the buying or selling process, ensuring you make the most of current market trends.

Don't wait for the market to shift. Call 925-200-6000 or click here to contact us today to start your real estate journey!