Many of us just returned from Family Reunion, our Keller Williams yearly conference, where agents from all over the world converge to learn and grow. The highlight each year is the state of the industry speech delivered by the company’s founder, Gary Keller. He’s one of the foremost respected authorities in the industry and delivers a data-packed overview each year to put the market in perspective. This year was no different and some of what we are sharing here has been culled from his two+ hour presentation.
Home buyers – it’s time to get some much needed perspective. Taking a historical look at things helps to do just that. In fact, if you look at real trends over a longer period of time, now is a better time to buy than many other years over the last 40 years.
Although home prices have gone up by 52% (this appreciation is all the more reason as to why buying real estate is a good investment), the real cost of borrowing – aka mortgage rates – has not gone up nearly as much as other goods and services, as shown in the graph above.
The real price of a mortgage is 15% higher today than it was in 2000, whereas price of a home has gone up over 50% since then. In other words, the national average price has gone up 50%, but the actual cost that you’re paying is only 15% higher.
Appreciation in real estate (about 4% every year) will always outstrip the appreciation of your wages/salary over time. So don’t wait to buy! If you don’t buy, and you’re just renting, you’re building the wealth of your landlord not your own.
While you wait for a perfect rate to come around, you’re missing out on profits your home could’ve already been making on appreciation, more than making up for the rate (plus, you can refinance always refinance, remember date the rate marry the mortgage).
It’s maybe a good time to remind you that these rates are still some of the lowest the U.S. has ever seen. In the 80s interest rates were at 16% and people were still buying homes. See the current rates as a gift and not the normal.
Check out the adjusted figures for Lake Country where home prices have increased in average value by 40% but the cost of a mortgage has only increased 7%. We’d love to run specific scenarios to share what this all means for you. Call or text 262.271.3621 or fill out the contact us form on our website.
