When it comes to the current housing market, there are some myths circling right now about mortgage rates, home prices and the current housing supply. Blindly following these myths could cost you more in the long run. And you could miss out on the opportunity to secure your dream home. Let’s bust some common misconceptions floating around about this year’s housing market.
Myth: I should wait to move until mortgage rates fall.
Reality: While the idea of a lower monthly payment is appealing, experts warn against trying to outsmart the market. Mortgage rates are notoriously hard to forecast. There are so many factors at play and any one of those can change the projections. Trying to predict when interest rates will fall is nearly impossible. And while you wait, home prices are only increasing.
If rates come down, more people are going to enter the market. And that means you’ll have a lot more competition from other buyers. That may make your move more stressful if you wait because greater demand could lead to an increase in multiple offer scenarios and rising prices.
Myth: I’ll get a better deal once prices crash.
Reality: As prices are expected to rise, a housing market crash is highly unlikely. Data shows that they are rising, just at a slower pace. That means waiting to buy a home may cost you more in the long run. The chart below shows what seven expert organizations predict will happen to home prices in 2024. It compares their first 2024 home price forecasts (made at the end of 2023) with their newest projections:
At first, experts projected home prices would only go up a little this year. But if you look at the column on the right, you’ll see they’ve all updated their forecasts and now predict prices will go up more than originally thought.
Myth: I won’t be able to find anything to buy.
Reality: Headlines might paint a bleak picture of a dried-up housing market, but don’t be discouraged by the exaggerations. While the housing inventory is below pre-pandemic levels, inventory is slowly starting to rise. The good news is that there are more newly-built homes to pick from right now. The graph below uses data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development to show how new home construction is ramping up.
Myth: I have to save enough for a 20% down payment.
Reality: 20% is toted as the magic number for down payments, but that is not always required. Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize. According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, the median down payment today is only 14%. And it’s even lower for first-time homebuyers at just 6%. There are even loan options with as little as 3.5% or 0% down for qualified buyers.
Buying a home is a life-changing decision, so don’t let these myths prevent you from making the right decision. With so much information out there, it is crucial to partner up with a knowledgeable agent who can help you navigate through the misconceptions. If you are ready to begin your homebuying journey, reach out to a Seven Gables agent today.
