The Villages Florida Market
Key Takeaways:
- The market is a hot topic right now, and after experiencing rapid growth over the pandemic years it looks to now be slowing down.
- Experts are expecting real estate values to fall over the next 12 to 18 months, before they stabilize and then eventually recover.
- There are buying opportunities, nonetheless, that will make your dream home affordable.
For many people, buying a home is the single largest purchase they're ever going to make. It makes sense to want to get it right. So, what will the property market look like over the next couple of years? Record high mortgage rates are putting pressure on property prices. After a period of record low interest rates, we've seen a large increase in the average mortgage rate after four subsequent 0.75 percentage point hikes in the prime rate.
According to data from Freddie Mac, the average interest rate on a 30 year fixed mortgage is nearly 7%. Just one year ago, that same average was under 3%. That's a massive difference and it is going to have a major impact on home buyers. For example, a 30-year mortgage of $300,000 at a rate of 2.98% would result in a monthly payment of $1,262. That same mortgage at 7% would mean an increase of $750 per month to $2,012. That's an extra $750 per month at a time when budgets are already stretched.
With that as a backdrop it's no surprise that Goldman Sachs is projecting property prices to fall over the next 12 months. After a 25% to 30% increase coming out of the pandemic, home prices will nonetheless remain high. Mortgage rates are expected to start back down over the next 6 to 12 months with home prices expected to start gradually increasing early in 2025. The chief economist for the National Association of Realtors, Lawrence Yun, believes we are likely to see total price growth nationally between 15% - 25% over the next five years
The main issue impacting housing affordability isn't going to be the changes in the value of properties, it will be the increased cost for the mortgages required to buy them. So, while the hot housing market will slow down, mortgages will be more expensive at the same time. A definite challenge for home buyers planning to buy within the next year or two. If you're planning on buying in the next 12 months cash is king. For buyers that must finance a portion of the purchase price, there are options to consider that might fit your budget: Comparing Money Saving Mortgages
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