The real estate market has seen some extremes recently. In the Tampa Bay area the market has certainly cooled since this time last year. I think buyers just don't know if it's a good time to buy.
The answer to that question is, as always, very dependent on your situation. For most people thinking of taking the plunge, it comes down to 2 basic questions:
What do you think will happen with interest rates?
What do you think will happen with home prices?
Let's start with interest rates. Yes they are continuing to rise. Just this year they've risen faster than in the last 50 years to about 7%. Please keep that in perspective, however. According to Freddie Mac, in 1972 the average was at 7.38%. By 1981 it had climbed to 16.63%. Then by 1993, it was back to 7.31%. It didn't get under 4% until 2012 when it fell to 3.66%, and it made it just under 3% in 2021. As you can see, 7% is not extreme. The 3% was much more an exception than the norm. I think you should look at the current interest rates as more of a correction than anything else. Yes, it definitely means you can probably afford less house than you could a year or 2 ago, but we certainly aren't anywhere near where we were in the 1980s.
So where will they go from here? Many economists are saying the rapid increase is likely behind us. That doesn't mean they won't continue to go up, just that they aren't predicted to climb at such a high rate. As the Fed continues to raise interest rates to control inflation mortgage rates are likely to follow, but most experts don't expect that to continue much longer. Also, most economists are anticipating a recession, and typically mortgage rates fall during times of recession.
If you need to buy now, I would suggest locking your rate in sooner rather than later. I would also suggest to most people to go ahead with the purchase if the rate is all that is worrying you. You will be locked in if it does continue to rise, and you can always refinance later if rates drop enough to recover the cost to do so.
Now what about home prices? Start by looking at what is happening in your LOCAL market. National averages are great for media headlines, but they don't really tell you anything about what is going on where you want to buy. I've seen experts forecast anything from a 2.8% increase in home prices to a 4% decrease nationally for 2023. In the Tampa Bay area we are still in a housing shortage, and more and more people move here every day. I personally do not believe there will be a big drop in prices here. I definitely believe we've plateaued from the craziness several months ago, and I believe there will be some correction to those inflated prices. We may even see prices dip below that for a bit. Historically real estate has been a very safe investment that continues to go up in value year over year. I don't believe that's going to be much different now. You likely won't see large gains in appreciation while the economy stabilizes, but you will see that appreciation again in the near future.
Maybe the bigger question for those of you who are deciding if you should buy vs. continuing to rent is what will happen to rents in the near future? Here the rents have skyrocketed in recent months. I haven't seen much evidence of that stopping or any correction there yet. So the money you may save in waiting for a lower interest rate to purchase will likely be spent on higher rents in the meantime.
As Will Rogers once said, "Don't wait to buy real estate. Buy real estate and wait." Or as Steve Bolton said, "The only bad time to buy property is later."