If you have been planning on buying a home in Virginia, you may be wondering when the right time will come along. Unfortunately, there is no clear answer to this. In fact, we seem further away from an answer than ever.
The reason for this is that housing in Virginia and throughout the US has been rising in value for the past two years. But whereas low mortgage rates made it possible for new buyers to afford homes regardless, the increase in interest rates in 2022 has made housing less affordable than ever.
As experts speculate about a bubble bursting, where does this leave you? What will happen next in the Virginia housing market and will you be able to benefit?
Insurance for Virginia Homeowners
First, let’s look at how associated costs are affected. Virginia homeowners insurance is still affordable, even though it has risen. This is because the value of VA homes have risen mainly due to supply and demand. While construction costs are exorbitant at present, they are only a small part of the skyrocketing value of homes. Insurance premiums take into account what they will have to pay out in claims, rather than what a home goes for on the market.
However, other associated costs like utility bills are going up significantly, making life harder for homeowners. So too are grocery bills, as inflation drives up prices, along with the impact of sanctions on energy imports from Russia.
In this context, should you put your buying plans on hold?
To Buy or Not To Buy?
Experts have been urging caution for months due to the possible impact of a housing bubble. With prices higher than ever and mortgage rates making homes tough to afford, now would seem the time that a housing bubble would burst. But that is not what is happening at present.
The housing market seems to be cooling but prices don’t look likely to go down anytime soon. As a potential new homeowner, you have to weigh the possibility that prices will suddenly drop with the possibility that they will continue to increase. If you buy now, you may regret it a month from now. However, if you wait, you might not be able to afford to buy a home in future.
Cost of Home vs Cost of Mortgage
Your decision may come down to how you look at the cost of a new home. The most intuitive thing to look at is the listed price. An average home in Virginia will go for about $362,000 at present. This is certainly high and may drop in the future.
But let’s say you wait for a price drop and the mortgage rate continues to rise. The current mortgage rate hovers around 5.1% for a 30-year mortgage. If a few months down the line, you get a home for twenty-thousand dollars less but the mortgage rate has risen significantly, you may end up paying more for your mortgage.
The price you pay every month is most likely to be the factor that impacts you on a material basis. Unless you’re paying for the house in cash, you’re going to have to deal with monthly mortgage payments for the next 30 years. A difference of a few hundred dollars will seriously squeeze your budget.
It is impossible to predict anything in today’s world, as we have seen major global events change everything month after month, year after year. The property market has acted contrary to what anyone expected, and assuming you know what will happen is only a guarantee that you will get it wrong.
Deciding whether to buy a home in Virginia in 2022 is tough, and it comes down to more than the listed price. You will have a lot to take into account before settling on a decision.