We all know home prices and mortgage rates are rising, which is causing potential buyers to wonder if they should Buy Residential Properties West Texas now, or wait for the market to change. We’re here to tell you why you should buy a residential property now and what happens if you wait.
The market is always changing and there are benefits to each change. The high home prices mean you’ll gain equity immediately as a homeowner. At the end of 2021, homeowners reached almost $10 trillion in equity, according to the New York Times. It’s the equivalent of $185,000, an increase of $48,000. No matter the original buying price, at the end of the day, land is limited and prices tend to increase in the long run.
An increase in everything across the board has some people worried, but inflation only works in your favor as a residential property owner in West Texas. When you own residential properties, the value of your properties increases. This means your net worth rises too. If inflation runs its course and comes back to normal, mortgage rates will start to slow as well as home prices.
If you wait to buy residential properties in West Texas, there are a lot of unknowns. Could there be more homes available in the future if you wait? Or could there be less inventory because people are buying now? Are construction builders catching up to demand or continuing to fall behind? Permits and construction have picked up, but it doesn’t guarantee more inventory and especially not in the near future. And with the supply chain disruptions in necessary materials like lumber, construction is taking much longer than usual. Home prices typically don’t decrease, so if that’s why you’re waiting, don’t expect a huge change. Home prices can’t continue to skyrocket either, but they won’t return back to pre-pandemic prices. We have been serving the West Texas area since 1980, so we’ve seen it all before.
Mortgage rates have increased from 3% in August 2021 to almost 5% in April 2022. Experts predict rates to continue to jump as high as almost 7%. And a higher mortgage rate means a higher loan amount, which hits your wallet hard as you’ll be paying more money for the same residential property. So if you’re worried about money, locking in a low mortgage rate now will save you money in the future.
We can also look at history to see how this played out. In 1994, mortgage rates jumped from 3% to 6%. The effect was home prices rose from $107,200 in 1993 to $114,600 in 1995. Home prices rose 2-3% throughout 1994 and finally slowed by the summer of 1995. But these home prices didn’t impact home sales. From 1993 to 1994, home sales actually increased from 3.7 million to 3.8 million. And according to data from the National Association of REALTORS®, by 1996 home sales were over 4 million even with mortgage rates over 8%.
One expert looks back on 2018 when there was another mortgage rate surge. In 2018, mortgage rates were around 5% and year-over-year price growth decreased by almost 4%. He expects this to translate into our current real estate market by having an increase of 7-10% for year-over-year growth in 2022.
Whether you want to wait or buy now, Ekdahl Nelson makes real estate happen. We provide world-class service by working hard to understand your desires and get the deal closed. When you buy with Ekdahl Nelson, we help make the process simple. We’re committed to helping you find the property of your dreams in the least amount of time and for the best value. Click here for a more in-depth look at the buying process.
Home price increases and low inventory levels might deter some potential homebuyers, but people won’t stop buying homes any time soon and you shouldn’t either! If you’re ready to buy a residential property in West Texas today, contact us!
