Ask these questions before jumping on the homeownership train

Buying a home is often the largest single purchase in a person’s life, so it is safe to say it is a big deal. Along with this, the last few years have seen some remarkable changes in the housing market. Home sales have exploded despite a pandemic that forced the nation into a recession. From September 2020 to September 2021, homeowner equity increased by 31%, a whopping $3.2 trillion (CoreLogic.com). Because of this, many homeowners (and potential homeowners) are asking two questions right now:

1. Why have home prices appreciated so much recently?

2. When is the right time for me to buy a home?

To answer our first question, let’s discuss what has happened to the housing market over the last couple of years. A few factors are: low mortgage rates, working from home, and demand from millennials.

Low mortgage rates

In March 2020, the Federal Reserve lowered the federal funds rate to encourage investing and stimulate economic growth in response to the pandemic. This, in turn, indirectly lowered mortgage rates, which are closely tied to the federal funds rate. In fact, 30-year mortgage rates reached a record low of 2.65% in January 2021 (Freddie Mac).

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