“If I had only bought a house five years ago…”
…and if we only had a dime for every time we heard someone say that…
Real estate markets are cyclical. There are certainly seasons where the upward marching trajectory of appreciation slows and even occasionally dips, but in the East Bay we have been the beneficiaries of a steady growth in the value of real estate for a long, long time.
This is the reason why you can buy almost any home in the East Bay, and if you take care of it, the value is likely to appreciate over time.
And even if that home isn’t your “forever” home, it can act like a piggy bank against the down payment on that dream home that is calling your name.
Now, why would it make sense to say yes to purchasing a home when the interest rates are hearty? Let’s explore:
When interest rates go up, most buyers pull back. In other words, the competition cools, and resultantly, home sales also cool off. It is possible to purchase a home at a “discount” when the competition is waiting for interest rates to drop again.
And when homes are purchased at a lower price…even just 3% lower…the numbers paint a compelling picture for acting in the face of a discount. Yes, even if that means you start your mortgage journey with a higher interest rate.
Combine the discount on the home purchase with the appreciation in value over a year of ownership, and the numbers tell us that it’s well worth holding a mortgage at a slightly higher rate for a short period of time (until you refinance).
If you’re a numbers person, we laid out an example above, demonstrating the net benefit of $71,596 after one year of ownership.
We love working with folks on their first home purchase just as much as we love reuniting with clients for that second or third home after they have gotten their feet wet with their starter home!