When you turn on the news, read an article, or scroll through social media, predictions about the future of real estate flood your screen. These predictions attempt to forecast what will happen in the market in the next 6-12 months. Crystal balls aside, let’s focus on hard data that can help you make an informed decision regarding buying or selling a home.
EXPERTS ARE PREDICTING A SIGNIFICANT JUMP IN HOMES VALUES
First, let’s examine our local market. Prices have dropped 2.7% year over year, causing a decline from $550,000 to $534,900. This situation presents potential buying opportunities. Economists from Zillow predict a significant jump of 6.5% by July of 2024, which would push the median home price in Portland up to $569,668.
IF RATES DROP EXPECT A FLURRY OF ACTIVITY
Next, the inventory remains low, with only 2.2 months of supply available. Consequently, competition for homes continues, keeping prices high. This limited inventory is one of the main factors contributing to the expected increase in prices next year. While it’s challenging to predict rate fluctuations, if rates drop by 1% or more, many home buyers will likely rejoin the market, leading to sales prices surpassing the list price by 3-5%, as we have seen before.
IF YOU WAIT FOR RATES TO DROP YOU BE COMPETING AND LIKELY PAYING MORE FOR A HOME THAN IF YOU BOUGHT NOW
Lastly, your monthly payment holds the utmost importance. Adding up all the numbers, the average monthly payment currently hovers around $3748. If you wait until next year, hoping for a 1% rate reduction, your payment would be around $3709, resulting in a meager savings of only $39 per month. However, by waiting, you would likely end up paying $50,789 more for the same home, with no guarantee of a lower purchase price or principal later.
IF YOU’RE THINKING OF BUYING REACH OUT AND GET YOUR PLAN IN PLACE NOW INSTEAD OF LATER.
In conclusion, while high interest rates may result in higher temporary payments, such payments can be refinanced later. On the other hand, once rates begin to drop, prices are expected to soar rapidly, sparking bidding wars once again. If you’re even remotely considering a change next year, it’s crucial to plan and start the conversation now to avoid missing out on potential savings and becoming caught up in the frenzy later!