Where Are Home Prices and Interest Rates Headed?

By John West

We understand that our clients are making big life decisions and are trusting us to help them make sure those decisions are wise ones. For us, it is not about transactions, it's about relationships.

If you’re considering buying a home, you’re probably paying attention to various sources such as the news, social media, your real estate agent, friends, and even conversations at local places like the supermarket. Home prices and mortgage rates are likely frequent topics of discussion.

To cut through the noise and get the most important information, let’s focus on two key questions about home prices and mortgage rates:

1. Where are home prices heading? You can rely on the Home Price Expectation Survey from Pulsenomics, which gathers insights from a panel of over one hundred economists, real estate experts, and market strategists. The latest survey indicates a slight depreciation this year, but it’s crucial to understand that the worst home price declines are already in the past. Many markets are experiencing appreciation again, and the projected 0.37% depreciation for 2023 is far from the crash initially feared.

Looking ahead, the graph shows a positive trend, with prices expected to appreciate in 2024 and beyond. Buying now could mean your home’s value will grow, building home equity over the years. Waiting may lead to higher costs as per the forecasts.

2. Where are mortgage rates heading? Over the past year, mortgage rates have risen due to economic uncertainty and inflation. However, recent reports suggest that inflation has moderated from its peak, which is good news for the market and mortgage rates. Typically, when inflation cools, mortgage rates also fall. Some experts predict that rates may pull back slightly over the next few quarters, settling around an average of 5.5% to 6%.

Considering the possibilities, here’s what you should think about:

• If you buy now and mortgage rates remain unchanged, it’s a smart move since home prices are expected to grow over time.
• If you buy now and mortgage rates fall (as projected), you still made a good decision, beating rising prices. If rates are lower in the future, you can consider refinancing.
• If you buy now and mortgage rates rise, you made a great decision because you secured a home before prices and rates increased.

If you’re contemplating a home purchase, staying informed about home prices and mortgage rates is crucial. While no one can predict their exact direction, expert projections can provide valuable insights. Reach out to a professional for an expert opinion on your local market.

If your housing needs have changed and you’re considering a move, contact us at 208-501-8200 or book an appointment with our team. We’ll provide you with the information you need to make the right decision for your needs and goals.