From Mark Sprague’s Texas Market Update:
I would suggest that with increasing costs of building, labor and development and higher lending rates, why wait? Every time rates go up 1% you lose 12% buying power. 90% of all builders are experiencing framing and finishing carpentry issues, and 85+% are experiencing plumbing shortages. Builders are seeing a 20+% annual labor and materials cost increase, which in turn increases values. The home/apartment you look at today will be gone tomorrow, and more expensive.
One key point that must be stressed is that interest rates are rising. Everyone agrees that we can expect 3 rate hikes in the next year – not big hikes, but hikes nonetheless. And as Mark noted, “Every time rates go up 1% you lose 12% buying power.”
What does that look like in real life? There are two ways to look at it. First, it means if you wait one year, and the rates have gone up as expected, a property that would cost you $300,000 today will cost you $336,000 next year. Or to look at it another way, your ability to purchase $300,000 today will mean purchasing $264,000 in 12 months.
It is not a gimmick to say, “Buy now!” Waiting in this market will cost you.
Read the rest of Mark’s update here: Texas Market Update