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Home prices are undeniably high.
Just this last month, Sold On Toni sold a home for more than any other in the history of the neighborhood it was located. This is a wonderful thing for sellers but scares many buyers especially when home prices are expected to even out instead of decrease while mortgage rates have risen from historic lows under 3%, to 5% or higher (though 5% is lower than the average rate over the last 30 years).
Increased prices and an increased cost to borrow money are especially hard on first-time homebuyers. The chart below shows the increase in home prices over the last 5 years.
It is critical, however, to look at the entire picture, not just the headlines.
As inflation increases the cost of everyday goods and monthly rent, having a steady, unchangeable housing cost can be a godsend. Home prices aren’t the only cost that has increased in the last few years. The cost of rent has risen dramatically as well. National Average rents have increased 25+% Year-over-year according to the Rent Report from Rent.com!
The pandemic era decrease in mortgage rates, work-from-home lifestyles, and stimulus payouts created a surge in home buyers which exacerbated already low inventory and caused home prices to shoot up. During that same time, many rents went unpaid. As home prices are beginning to level out, rents are surging to account for limited rental availability and increased costs to the property owners. Real Estate Witch built the below graph using data from Housing and Urban Development; United States Census Bureau. Regardless of age, this graph shows rent prices have exceeded income increases for most of our lives. I think it is safe to say that the overall cost of housing is increasing.
Each person must decide for themselves if they are at a point in their life where they should take their chances with variable rents or purchase a home with higher initial investment, but a steady, fixed mortgage cost each month.
Give us a call. We are happy to provide you with more information about the local real estate market and to connect you with great lenders and financial advisors that can help you make the right decisions for your life.
815-315-1110
We’ve referred over 200 families across the country. Let’s help guide you in the right direction!