If you're financially ready to buy real estate and your life circumstances are telling you now is the time but you're frozen because interest rates are high and there is uncertainty in the market then this video is for you.

I compare interest rates with home prices over the last 10 years. I'm doing this to illustrate that when rates go down, prices go up. Low rates bring a competitive market, that only sellers love, and higher prices. The attached graph compares interest rates with the Housing Price Index (HPI) over the past decade, specifically from January 1, 2014, to the present. To provide an accurate representation of what purchasers would obtain, I used the 5-year fixed rate rather than posted rates. The HPI is a superior metric to average or median prices, as it offers a more stable view of the real estate market, avoiding monthly fluctuations.

As you can see, the line chart illustrates a fascinating relationship between interest rates and housing prices. When interest rates rise, housing prices tend to decrease shortly after, and conversely, when rates drop, prices tend to rise. This pattern indicates that now is an opportune time to consider purchasing real estate. Projected for sometime in 2024, the latter half, interest rates are expected to decline, causing housing prices to rise. Many buyers prioritize low rates over high property prices, which may lead to a more competitive market. Purchasing now positions you to buy at a lower price, and as rates drop, the value of your property is likely to increase rapidly. By choosing a 2 or 3-year term, you can refinance or renew and secure a lower rate, capitalizing on the faster growth of your property's value and equity.

Renting vs. Buying:

I've also included a comparison for those who are currently renting, illustrating what the next 5 years might look like if they decide to buy now. I used today's interest rate for a 5-year fixed mortgage and a conservative assumption of 3.5% property appreciation per year. The model is based on a modest $3,500/month rent payment for a downtown 2-bedroom condo. Of course, there may be other factors to consider, and I'm here to discuss any additional elements that might influence your decision. Your comfort and confidence in this process are paramount.

Housing Price Index (HPI) explained: https://www.rebgv.org/content/rebgv-o...

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- Glenn Feldstein PREC* | Real Estate Advisor

Posted by Glenn and Brittany Real Estate on

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