Below is a chart of mortgage rates going back to 1971. Note the average mortgage rate over the last 50 years is about 7.7%. The recent spike in interest rates over the last few years has really impacted purchasing power. There is no argument about that. However, waiting on rates may not work out.
Here are two first time buyers I was working with in the spring of 2022 when interest rate began rising.
Buyer #1: When we started looking at homes, buyer 1 was pre-approved for a purchase price in the mid $400's. She was not trying to max out her mortgage, so we were looking at homes under $350,000. After a short time looking at homes interest rates jumped up, and her purchasing power dropped from around $450,000 to less than $400,000. She purchased a home for about $330,000 in May of 2022. She has seen about $35,000 in price appreciation.
Buyer #2: Another buyer I was working with at the time was in about the same price range, and actually in the same general area. When interest rates jumped, he decided to take a 'wait and see' approach. Prices and interest rates kept climbing, and he ended up purchasing a home in the same neighborhood for $405,000 a year later. He has seen probably less than $10,000 in appreciation.
I am not trying to say that this is indicative of every buyer's experience. I will say that in nearly 30 years in the real estate industry, it is almost always better to buy now than wait. From 2007 to 2011 prices did plunge during the great recession, otherwise buying now instead waiting has virtually always been better in Orlando over the last 50 years.
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