POTENTIAL INCREASE IN HOME PRICES
During the past three years, home prices have risen by greater than 30% in most markets. This means that it will likely cost you:
- $650,000 to buy a home you could have purchased three years ago for $500,000
- $1,300,000 for a home you could have purchased three years ago for $1,000,000
While double-digit annual increases in home prices are unlikely, a more reasonable scenario is that home prices may rise by 3%+ in the coming year. That’s because supply is likely to remain low and demand is likely to remain high. If home prices only go up by 3% per year, you may lose another $15,000 – $30,000 for every year you wait, depending on your price range.
POSSIBLE INCREASE IN INTEREST RATES
Interest rates have already gone up considerably since the Federal Reserve announced it would be phasing out its pandemic-era stimulus programs. That means that:
- The monthly payment on a $500,000 mortgage has already gone up by more than $889/month
- The monthly payment on a $1,000,000 mortgage has already gone up by more than $1,779/month
Some economists anticipate that rates may continue to remain elevated because inflation remains elevated. If interest rates continue to move higher, your monthly payment may quickly become unaffordable and your purchasing power may go down significantly… not to mention the long-term impact. For example, another 1% increase in interest rates on a $500,000 mortgage could cost you over $100,000 over the life of your home loan. Contact me so we can explore ways to avoid that scenario.