As of January 15, 2025, mortgage rates remain close to 7% and home prices are expected to continue to rise. You might wonder whether now is the right time to buy a home. While your first reaction may be to wait for more favorable conditions, current market trends suggest that delaying your purchase could be more costly than you might think.

Rising Home Prices

Home prices have been on an upward trajectory, with a 3.9% annual gain reported in September 2024. This trend is expected to continue into 2025, with forecasts predicting a 3.7% increase in home prices.

Let’s do the math*:

• Current Home Price: $450,000
• Projected Appreciation: 3.7% over the next year
• Future Home Price: $466,650

*Data is hypothetical and for example purposes only.

By waiting a year, you could face an additional $16,650 in purchase price, which may outweigh any potential savings from lower interest rates or increased savings.

Mortgage Rates Remain Elevated

While some forecasts suggest a gradual rate decline, rates are not expected to drop significantly in the near future. Reports project interest rates may average around 6.3% in 2025.

If you choose to wait, keep in mind, rates can still go up! Even a slight increase in rates can substantially raise your monthly payments and total loan cost.

Lost Equity Potential

Homeownership allows you to build equity as property values appreciate. By delaying your purchase, you miss out on potential equity gains.

For example*:

• Home Value: $450,000
• Annual Appreciation: 3.7%
• Equity Gained in One Year: $16,650

*Data is hypothetical and for example purposes only.

This equity contributes to your net worth and can be leveraged for future financial needs.

Rental Market Dynamics

While some regions have experienced a decrease in rental prices due to increased apartment construction, rents remain high in many areas, and the money spent on rent does not contribute to building your own equity.

For instance*:

• Monthly Rent: $2,000
• Annual Rent Payments: $24,000

*Data is hypothetical and for example purposes only.

Over time, these payments add up without providing the financial benefits of homeownership.

What About Current Homeowners?

If you already own a home, you might be wondering how these trends impact you. Here’s why staying informed about the market is just as important:

• Maximize Your Current Home’s Value: Rising home prices mean your current home is likely appreciating, potentially giving you more equity to leverage when moving up to a new home. Selling in a tight inventory market can also put you in a strong position with buyers.
• Upgrading Could Cost More Later: While your home gains value, if you’re looking to upgrade, the price of your next home is rising too. The longer you wait, the larger the gap between your current home’s value and the cost of your dream home.
• Rate Uncertainty: If you locked in a low rate on your current home, upgrading might mean taking on a higher rate—but waiting for rates to drop significantly is a gamble that could leave you paying more as home prices continue to rise.

The Bottom Line

In the current market, waiting to buy a home could lead to higher costs due to rising home prices, potential increases in mortgage rates, and missed opportunities for building equity. If you’re considering purchasing a home, now may be an opportune time to act.

Remember, Movement has options to help you navigate these decisions and find the best financing options for your situation. Reach out today to explore your possibilities and take the next step toward homeownership.

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