If you keep up with the news, you’ve surely heard about the rise in interest rates and how homebuyers are being impacted. To combat rising inflation fueled by the COVID-19 pandemic and provide stability to the housing market, the Federal Reserve began increasing interest rates in March 2022. Since then, the country’s buyers and sellers have felt the impacts of several rate increases, with the
most recent influx being in mid-August.
In July 2023, the
national median home price rose to $413,800 — the second largest price in history, with June 2022 taking the first spot. Despite rising interest rates, many markets are thriving, with home prices and low demand playing significant roles in this year’s markets. Because of this, many buyers are hesitant to purchase a home in a housing market primarily dominated by sellers and interest rates that are higher than they’ve been in more than a decade. At the surface level, these factors might be enough to convince buyers to hold off on purchasing single-family homes for sale in Dedham, MA.
If you’re experiencing buyer hesitation or want to buy Dedham real estate but are uncertain whether now is a good time to purchase, here are several reasons why you should consider taking the plunge into homeownership.
Owning a home makes more sense than renting, no matter what market you’re in
Owning a home is a significant life investment that can reap long-term wealth and financial stability. Even in a housing market experiencing higher interest rates, buying property and building equity is a wise move. When you become a homeowner, the property is yours. If you are renting, you are taking your hard-earned money and putting it in someone else’s pocket. Instead of increasing your financial worthiness through investing in real estate, you are providing wealth to a landlord or management company. The money you spend on rent each month could instead be used toward your mortgage principal, increasing its overall equity and providing you with a long-term return on your investment.
Owning a home is also a great way to maintain a good-standing credit score. By making your payments on time, you are showing other lending companies that you make good financial decisions, which will provide you with lower interest rates. No matter how long you faithfully pay your landlord rent on time, your credit likely won’t increase despite your efforts.
Interest rates could continue to increase
Interest rates are at a 22-year high, and experts say that
Americans may experience more increases before the year ends. This is why it’s imperative to enter the market now. Playing the waiting game may cost you more money in the long run and decrease the amount of home you can purchase when you do decide to enter the market. While you might not want to pay today’s rate, it could be less than what you will pay if you continue to wait.
With higher interest rates, you’ll find less competition for homes
Besides, there are some advantages to entering the market now, even with higher interest rates on the table. Competition among buyers may be lower, decreasing the chances of bidding wars when buying Dedham real estate.
Interest rates were historically low at the beginning of the COVID-19 pandemic, leading to an astronomical increase of buyers, low housing supply, homes selling for above asking price, and multi-offer situations. This created a seller-heavy market, with those looking to list their property on the market receiving the upper hand during negotiations. Many buyers were forced to make concessions they otherwise wouldn’t have in order to make their offer more appealing. Buying a home “as is,” no matter what the inspection results stated, became more common during this time.
Higher interest rates have led to less buyers in many markets. If you look at homes for sale in Dedham, you’ll undoubtedly find the competition a bit less than last year. With fewer buyers, you’ll have more time to look for homes and have a better say during negotiations.
Refinancing at a future date is always an option
Paying an interest rate that is higher than you’d like isn’t the end of the world. After all, you’ll be building equity in an investment and no longer paying monthly rent to a landlord. Over the next several years, the value of your home will increase, generating wealth for you and your family. As you pay down your principal, be sure to stay up-to-date on interest rates. When interest rates decline, you can always choose to refinance, thus lowering your monthly payment and decreasing the overall out-of-pocket cost for your property.
The good news is that relief may be attainable next year. Industry experts project that 2024 will provide much-needed aid to buyers, with the latest forecasts stating the country will experience a
consistent decrease in interest rates. In quarter four, analysts estimate rates will drop to 5.9% from the first quarter’s 6.4%, providing more buyer power and confidence in the market.
Take the next step
The decision to buy real estate is one that should be made with careful consideration and planning. Purchasing a home is one of the most important life decisions you’ll make, but it doesn’t have to be a scary one. With a wide range of mortgage options and the expertise of a skilled real estate professional to help you navigate the market, you can find the home of your dreams.
If you are ready to take the plunge into homeownership and want to view homes for sale in Dedham, MA,
contact real estate expert Elizabeth Bain. Elizabeth specializes in Greater Boston real estate, including the communities of Downtown Boston, Dedham, Newton, Arlington, Needham, and Cambridge. With years of experience guiding clients through the complexities of buying and selling Boston’s luxury and historic real estate under her belt, Elizabeth is ready to help you reach your goals.
