What’s the Deal With Housing?
Thanks to record-low interest rates, recent years have seen a frenzy of homebuying. This trend, combined with low supply and delayed production of new homes, has made buying a new home more expensive than ever.
A report from the National Association of Realtors® shows the share of first-time homebuyers was at an all-time low last year. Additionally, first-time buyers who successfully purchased a home were the oldest that they’ve ever been. These are two signs that it’s getting more difficult for people to afford a home.
That said, the real estate market is also notoriously cyclical. If you’re hoping to buy a home in the next couple of years, the tide could actually be shifting in your favor.
Buying a Home by 2030
With mortgage rates hovering around 7%, it’s much more expensive to finance a home this year than it was last year. However, these higher rates have also pushed down demand, leading to decreased homebuying in recent months, which will stabilize home prices over time.
By 2030, real estate experts project that a new single-family home should cost roughly $382,000. Of course, there are wide disparities across the country. Homebuyers looking in New York City are already facing median prices well above that figure, while residents of Wichita might consider that cost exorbitant.
Buying a home is far from a lost cause, but it’s more important than ever to create a plan of action if you want to own your own house over the next few years.
Start by narrowing down where you’d like to live. Monitoring prices in specific markets will give you a more realistic idea of how much you’ll need to save up for a down payment. From there, you’ll likely want to reverse engineer comparable prices and determine how much different-sized down payments would cost you. Finally, create a monthly savings plan to ensure you reach your savings goal by the time you’re ready to buy.
Sticking to this monthly savings plan is crucial. The earlier you start saving, the more options you’ll have down the road — whichever road (or street) you choose.
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