With a sense of gloom pervading the industry for what feels like years, let’s work to break through the negativity and focus on the good news for the industry. I’m not disputing the validity of market concerns on home price appreciation, higher interest rates, or inventory constraints, but there is still plenty of good news for the market as we begin the new year. Let’s concentrate on these four:
1. Rates are Still Low
Rates may be high compared to recent levels during and prior to the pandemic, but they are still historically low, according to a historical mortgage rate chart from TIME. It’s so easy to get caught up in the here and now that we forget to bring current rates into perspective.
2. People are Building Wealth
Homeownership continues to help Americans build wealth for their futures. The National Association of Realtors (NAR) reported that single-family homeowners typically accumulated $225,000 in housing wealth over 10 years. The NAR also reports that average monthly rents increased by more than 14% year-over-year in December 2021 and the Federal Reserve Bank of Dallas forecasts that year-over-year rental price growth will reach 8.4% by May 2023.
With rent prices soaring, homeownership is not only a great wealth-building tool for the future, but it could be the more affordable option for the here and now. While it seems like a big commitment upfront, buying a home could potentially offer a lower monthly cost, while allowing buyers to start building equity that will pay off in the long run.