Have you been on the fence about buying a home in 2022? San Diego realtor Danny Paz discusses how this year's interests rates are projected currently to increase. And how waiting could cost you more money in the long term when purchasing a home.

Is Now the Time to Buy a Home?

Hey everybody. It's Danny Paz with the Whissel Realty Group. And I've got an update for you on what's going on in the real estate market. Now I know a lot of people that have been waiting to purchase a home because they are concerned about how high prices are right now.

As we know, there's a great deal of inflation going on with real estate as well as with a lot of other industries. And what the Fed is now doing to try to counteract that is they've decided to raise interest rates. Now for the last two to three years, they've been saying that they're going to raise interest rates about three times in each of the last three years, which they haven't done.

However, this year, it sounds like they're actually staying true to what they've said. And they've already started to raise those interest rates. Now, what that does is counteract the rate of inflation. That doesn't mean that prices won't continue to go up, but it's supposed to slow down how fast they go up. Now, what happens here is that you actually may end up with a higher cost per month even if prices were to go down.

Because for every 1% of interest going up, you actually lose 10% of your overall pre-approval if you've spoken to a lender. Now, what happens there is you actually... So let's say you're approved for $500,000. Interest rates go up a point. Now you're only approved for $450,000 on your loan. That's really significant. In addition to that, it raises how much you pay every month, even though the overall price of the home if it were to go down, which we don't see happening. Anyway, I just wanted to talk to you guys. If you've been on the fence, and you're waiting for something to happen in the market and change, something is changing.

And that's actually going to make it more expensive to buy a home in the future. Potentially, I don't have a crystal ball. If anybody says they know what's going to happen, they're lying. So anyway, that's my best prediction of what's actually going on. They said there will be two other rate hikes. Just for starters, rates were about 3% a couple of months ago. And now we're at about 3.75% to 4%. Historically, those are still significantly lower than what it's been in the last 20 to 30 years, obviously. But we've been spoiled with low-interest rates recently.

Anyway, do what's best for you. Make sure you can afford whatever home you buy. And then it doesn't matter what happens with the market. Just want to make sure you guys know what's going on. If you need any other information about what's going on in the real estate industry, be happy to talk anytime.

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