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Why Owning a Home Is Worth It in the Long Run

Today’s mortgage rates and home prices may have you second-guessing whether it’s still a good idea to buy a home right now. While market factors are definitely important, there’s also a bigger picture to consider: the long-term benefits of homeownership.

Think of it this way. If you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. That’s because over time, home values usually grow – and that means a homeowner’s net worth does too. Here’s a look at how that can really add up over the years.

Home Price Growth over Time

The map below uses data from the Federal Housing Finance Agency (FHFA) to show how much prices have grown over the last five years. Since home prices vary by area, the map is broken out regionally to really showcase larger market trends:

a map of the united states

You can see that nationally, home prices increased by over 57% in just five years.

Some regions are slightly above or below that average, but overall, home prices saw a big uptick in a short time. And if you zoom out even more, the benefit of homeownership — and the drastic gains homeowners made over the years — become even more clear (see map below):

The second map shows that, over a roughly 30-year span, home prices appreciated by an average of more than 320% nationally.

So the typical homeowner who bought a house about 30 years ago saw their home triple in value during that time. And that’s a major reason so many homeowners who bought their homes years ago are still happy with their decision today.

Bottom Line

There’s no denying today’s market is complex. But if you’re ready and able to buy right now, get in touch with an agent to talk through how you can still make your move happen. That way you can take advantage of the long-term advantages that come with homeownership, like your ability to build wealth as your home value rises.

When Will Mortgage Rates Come Down?

One of the biggest questions on everyone’s minds right now is: when will mortgage rates come down? After several years of rising rates and a lot of bouncing around in 2024, we’re all eager for some relief.

While no one can project where rates will go with complete accuracy or the exact timing, experts offer some insight into what we might see going into next year. Here’s what the latest forecasts show.

Mortgage Rates Are Expected To Ease and Stabilize in 2025

After a lot of volatility and uncertainty, the most updated forecasts suggest rates will start to stabilize over the next year, and should ease a bit compared to where they are right now (see graph below):

a blue and white graph with numbers

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“While mortgage rates remain elevated, they are expected to stabilize.”

Key Factors That’ll Impact the Future of Mortgage Rates

It’s important to note that the timing and the pace of what happens with mortgage rates is one of the most challenging forecasts to make in the housing market. That’s because these forecasts hinge on a few key factors all lining up. So don’t be fooled, because while rates are expected to come down slightly, they’re going to be a moving target. And the ups and downs of ongoing economic drivers will likely stick around. Here’s a look at just a few of the things that’ll influence where they go from here:

  • Inflation: If inflation cools, rates could dip a bit more. On the flip side, if inflation rises or remains stubbornly high, rates may stay elevated longer.
  • Unemployment Rate: The unemployment rate also plays a significant role in upcoming decisions by the Federal Reserve (the Fed). And while the Fed doesn’t set mortgage rates, their actions do reflect what’s happening in the greater economy, which can have an impact.
  • Government Policies: With the next administration set to take office in January, fiscal and monetary policies could also affect how financial markets respond and where rates go from here.

Remember, these forecasts are based on the best information available right now. As new economic data comes out, experts will revise their projections accordingly. So, don’t try to time the market based on these forecasts alone.

Instead, the best thing you can do is focus on what you can control right now. Work on improving your credit score, put away any extra cash for your down payment, and automate your savings. All of these things will help you reach your homeownership goals even faster.

And be sure to connect with a trusted agent and a lender, so you always have the latest updates – and an expert opinion on what that means for your move.

Bottom Line

If you’re planning to move and want to stay informed about where mortgage rates are heading, connect with a trusted agent and lender. 

Control the Controllables If You’re Worried About Mortgage Rates

Chances are you’re hearing a lot about mortgage rates right now, and all you really want to hear is that they’re coming back down. And if you’ve seen headlines about the early November Federal Funds Rate cut by the Federal Reserve (The Fed), maybe you got hopeful mortgage rates would start to decline right away. Although some media sources may lead you to believe that the Fed’s actions determine mortgage rates, in reality, they don’t. 

The truth is, the Fed, the job market, inflation, geopolitical changes, and a whole list of other economic factors influence mortgage rates, too. So, while recent actions from the Fed set the stage for mortgage rates to come down over time — it’s going to be a gradual and, likely bumpy, process.

Here’s the best advice anyone can give you right now. While you may be tempted to wait for rates to fall, it’s really hard to try and time the market — there’s just too much that can have an impact. Instead, set yourself up for homebuying success by focusing on the factors you can control. Here’s what to prioritize if you’re looking to put your best foot forward.

Your Credit Score

Credit scores can play a big role in your mortgage rate. And the difference of just a few points can make a significant impact on your monthly payment. As an article from Bankrate explains:

“Your credit score is one of the most important factors lenders consider when you apply for a mortgage. Not just to qualify for the loan itself, but for the conditions: Typically, the higher your score, the lower the interest rates and better terms you’ll qualify for.”

With rates where they are today, maintaining a good credit score is one of the keys to getting the best rate possible. To find out where your credit score stands and what you can do to give it a boost, reach out to a trusted loan officer.

Your Loan Type

There are many types of loans, and each one offers different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:

“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose. Talking to multiple lenders can help you better understand all of the options available to you.”

Work with your team of real estate professionals to see which loan types you may qualify for and figure out what will work best for you financially.

Your Loan Term

Just like with loan types, you have options when it comes to terms, or the length of your loan. As Freddie Mac says:

“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”

Lenders typically offer mortgages in 15, 20, and 30-year terms. And which term you go with has a direct impact on your rate. Talk to your lender about which one is right for your situation. 

Bottom Line

Remember, you can’t control what happens in the broader economy or when mortgage rates will come down. But there are actions you can take that could help you set yourself up for success.

Connect with a local real estate agent and lender to go over what you can do now that’ll make a difference when you’re ready to move.

Why Today’s Mortgage Debt Isn’t a Sign of a Housing Market Crash

One major reason why we’re not heading toward a foreclosure crisis is the high level of equity homeowners have today. Unlike in the last housing bubble, where many homeowners owed more than their homes were worth, today’s homeowners have far more equity than debt.

That’s a big part of the reason why even though mortgage debt is at an all-time high, this isn’t 2008 all over again. As Bill McBride, Housing Analyst for Calculated Risk, explains:

“With the recent house price increases, some people are worried about a new housing bubble – but mortgage debt isn’t a concern . . .”

Today’s homeowners are in a much stronger position than ever before. So, let’s break it down and see why today’s mortgage debt isn’t anything to fear.

More Equity, Less Risk of Foreclosures

According to the St. Louis Fed, total homeowner equity is nearly triple the total mortgage debt today (see graph below):

a graph of a graph showing the rise and fall of mortgagesHigh equity makes it less likely for homeowners to face foreclosure because they have more options. If someone struggles to make their mortgage payments, they could potentially sell their house and still come out ahead thanks to their built-up equity.

Even if home values were to dip, most homeowners would still have a comfortable cushion of equity. That’s a big contrast to the 2008 crisis, where many homeowners were underwater on their mortgages and had few options to avoid foreclosure.

Delinquency Rates Are Still Near Historic Lows

Another reassuring sign is that, according to the NY Fed, the number of mortgage payments that are more than 90 days late is still near historic lows (see graph below):

a graph showing a line going downThis is partly due to a variety of programs designed to help homeowners through temporary hardships. As Marina Walsh, VP of Industry Analysis at the Mortgage Bankers Association (MBA), says:

“. . . servicers are helping at-risk homeowners avoid foreclosures through loan workout options that can mitigate temporary distress.”

So, even if someone falls behind on their payments, there are support systems in place to help them avoid foreclosure.

Low Unemployment Helps Keep the Market Stable

One other important factor is today’s low unemployment rate. More people have stable jobs, which means they’re better able to afford their mortgage payments. As Archana Pradhan, Principal Economist at CoreLogic, explains:

“Low unemployment numbers have helped reduce the overall delinquency rate . . .”

During the last housing crisis, unemployment was much higher, which led to a wave of foreclosures. Today’s unemployment rate is very different (see graph below):

a graph of employment and financial crisisThat stability in how many people are employed is one of the reasons the market doesn’t have the same risks as it did the last time.

There’s no need to worry about a wave of distressed sales like the one we saw in 2008. Most homeowners today are employed and have low-interest mortgages they can afford, so they’re able to make their payments. As McBride states:

“The bottom line is there will not be a huge wave of distressed sales as happened following the housing bubble.” 

Bottom Line

While mortgage debt is high, rest assured the market isn’t on the brink of another crash. Instead, most homeowners are in a strong position. If you have questions or concerns, connect with a local real estate agent.

Stay informed