Interest Rates in a Booming Market
Have you noticed the market is incredibly hot right now?
One popular thought is that the pandemic caused more people to want to buy and own a little piece of land, all their own, where they have space all their own to escape to.
My belief is the hot housing market is tied to the super low interest rates. These low interest rates, tied to new opportunities like FHA first time homebuyer loans are making this a brand new option to a buyers of all ages interested in owning some land.
What this is leading towards is inflated prices across all neighborhoods and cities. Fewer houses on the market and each of them is snagged up immediately.
Whether this means you should dive in with the fuss or try to wait it out is up to you. No one has that crystal ball with the exact date the high prices will end, but if you need a house, and for your specific situation you think it’s the right move and the right time, take advantage of the interest rates and dive in.
But how good are these interest rates really? Let’s compare two houses. One at $250,000 and one at $300,000. The $250,000 house is from a few years back when interest rates were at 5%, and the $300,000 house is a house currently on the market at a 3% interest rate. If you keep this house for 30 years, see below for what is paid over time, to the mortgage, interest, and other fees.
Disclaimer: These exact numbers may adjust slightly based on various factors.
While it is not ideal by any means to spend an extra $50,000 on a house, if you are planning to live in the home for 30 years, it could end up saving you time in the long run.
Let’s compare two houses at the same price, $300,000. See below.
Disclaimer: These exact numbers may adjust slightly based on various factors.
You should buy when you and your specific situation is ready. It may be now but it might also be later. It might be while house prices are high but interest rates are low, but it also might be waiting out for something more affordable to hit the market.
“There are always options.”