Many people say that now that interest rates have gone up over 8% it may not be a good time to buy real estate. I will explain why this maybe a great time to purchase a home, but maybe not for everyone.
First off there are always people that are looking to move either because of retirement, change of job, different schools or closer to the beach. Whatever your reason people are always on the move. So let’s talk interest rates and i can show you that back in the 1990’s interest rates were over 13% so today’s rates would be considered low in comparision. Some people now feel that they are pushed out of the home owning experience and I will admit that in some cases you are right. Some people know their budget and stick to it, so back when interest rates were at 4% a couple may have said to themselves that they can afford a monthly payment of $3,000 a month. Now in todays market with higher rates that same house payment could be around $6,000 a month. Does this mean you can never buy a home, the answer is no. You still have several options and here are a few. Buy a home that is a little smaller or maybe in the next town where prices are lower. Other options are an older home or a townhome instead of a single family home. There are options whereever you look. Fairfax County is so large that we could find you an entire array of homes for you to view. If you want to go to Loudoun County there are more homes and style to pick from.
Another option is to talk to your Mortgage Broker and compare a adjustable rate mortgage to a fixed rate mortgage. Knowing your options and what you can really afford is always a benefit. You may also try to see if you can increase your down payment which will effect the monthly payment.
What about Buyers that can make a larger down payment or even pay in cash. For this type of buyer this is the best real estate market you have seen in years. Just a year ago as a Buyer looking for a home in Alexandria, Arlington, Reston, Burke, Fairfax and other cities you would have been in a multiple offer bidding war to buy your dream home. To your benefit the following has happened over the past year. Inventory of luxury estates, single family homes and condos have all increased. There are no longer multiple offer wars going on so you can take a little more time choosing the home that you really want. A home in that neighborhood that you really want maybe easier to find now. Prices have leveled off any some properties now have price drops. This could be the best opportunity for you to buy a home in years.
In some cases we can also compare higher interest rates verus lower purchase price. We would have to sit down with you one on one to best discuss this with you, but here is a general way of looking at this. Let’s say you were going to buy a $500,000 home one year ago with a lower interest rate. Today, what if you could buy that same home for less money. Then you would have to look at the increase of your monthly payment due to higher interest, but also a savings of buying the home at a lower price. If you only stayed in the home for 5 years and then sold it you may find that purchase price savings was more then the increased interest rate for that 5 year period. Plus you pick up any appreciation of the home value. I will also add that there maybe a tax benifit of owning vs renting, but I would suggest that consult a tax advisor about those benefits.
So is 2023 a good time to buy, I say yes in every way, the more money you can put down on the property the better. If you can afford to buy with cash then you are in the best possible position in recent years. If you would like to talk more about real estate in Northern Virginia, Maryland or Washington DC please contact me. We can talk by phone, on a zoom call or at one on my companies many offices.
My goal is to explain to you all of the available options that you have in todays real estate market. Present to you a selection of properties for you to consider and when you are ready I will be there to guide you through the home process.
Contact me, Laura Augustinos, 7 days a week at Laura@sellingnorthernvirginiarealestate.com or send me acomment below.