Aloha, Lance Owens (RS) with LUVA real estate and our partners at KCM checking out the latest numbers in real estate. I will throw in some good local insight for you also. One other thing to consider as you read this, 2 major factors in purchasing a home are,,,, Price, and Interest rates, with that in mind if you buy a home Today, and next year values go up, can you renegotiate the price - NO.... If interest rates go up, can you renegotiate rates - yes, but why would you? If prices go down, does it offset the amount of rent you have paid and loss of tax benefits.... Nobody knows that answer until it happens, but if interest rates go down, yes you can renegotiate them by getting a new loan.
Rising interest rates have begun to slow an overheated housing market as monthly mortgage payments have risen dramatically since the beginning of the year. This is leaving some people who want to purchase a home priced out of the market and others wondering if now is the time to buy one. But this rise in borrowing cost shows no signs of letting up soon.
Economic uncertainty and the volatility of the financial markets are causing mortgage rates to rise. George Ratiu, Senior Economist and Manager of Economic Research at realtor.com, says this:
“While even two months ago rates above 7% may have seemed unthinkable, at the current pace, we can expect rates to surpass that level in the next three months.”
So, is now the right time to buy a home? Anyone thinking about buying a home today should ask themselves two questions:
1. Where Do I Think Home Prices Are Heading?
There are two places to turn to answer this question. First is the consensus of what experts are saying. If you look at what experts are projecting for home prices in 2023, they’re forecasting home price appreciation around 2%. While it’s true some are calling for depreciation, most are calling for appreciation in home values over the next year.
Quick note on North Kona, Year over year as of Oct 6 2022 is 12% increase, year to date is 15%.
The second spot to turn to for information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. According to the latest release, the experts surveyed are also calling for home price appreciation for the next several years (see graph below):
2. Where Do I Think Interest Rates Are Heading?
Like mentioned above, Ratiu sees mortgage rates rising over the next several months. Another expert agrees. Mark Fleming, Chief Economist at First American, says:
“While mortgage rates are expected to continue to drift higher over the coming months, much of the rapid increase in rates is likely behind us.”
Lance Owens, President of West Hawaii Association of Realtors notes: The amount of buyers getting a loan in West Hawaii for the month of Sept 2022 were at 60% compared to Sept 2021 also at 60% - it hasn't changed the ratio one bit. Yes the number of homes that have closed are down, but the ratio of the buyer is exactly the same!
The instability in the world and higher inflation are driving this volatile market, resulting in higher borrowing rates for those looking to buy homes.
Bottom Line
If you’re thinking about buying a home, asking yourself about home prices and mortgage rates will help you make a powerful and confident decision. Experts see both prices and rates rising in the future. The alternative is to rent, but rents are also increasing. That may mean buying a home makes more sense than renting.
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