Should I Buy a Home Now or Wait?
If you've been thinking about starting the search for your new home, there may be several factors preventing you from moving forward. From higher interest rates to talk of a housing crash, today's environment has caused many would-be homebuyers—and sellers—to put their plans on hold.
While reticence is understandable given today's headlines, there are several real-world facts that you should consider before pushing off your plans to buy a home. Here are some reasons why it might be a good idea to start your search now, along with some important steps to take that will make a big difference.
Interest rates remain relatively low.
The mortgage interest rates of between 2% - 3% that we saw at the height of the pandemic were an anomaly, so waiting for rates to move back into that territory is a futile effort. While the current rate of between 6% - 7% is a bit higher than pre-pandemic rates, it is still vastly lower than other times in history, such as more than 18% in the early 1980s. In other words, if you're anxious to buy a home, don't let the current rate hold you back.
Affordability is easing.
The pandemic-induced housing boom caused a buying frenzy, which led to a seller's market fueled by cash offers and bids significantly over list price. The silver lining of rising interest rates is that it's slowed the unrealistic pace of 2020 and 2021, reducing competition among buyers and causing skyrocketing home prices to tick down. Today, you have a much better chance of finding a home at or below list price.
Inventory is increasing.
These changing market trends have also triggered a slight increase in the number of homes on the market, so if you're looking for a home, there's a bit more to choose from these days. According to realtor.com's December 2022 monthly housing report, the number of homes for sale increased 54.7% over the same time in 2021.
This is not 2008.
While talk of another housing crash makes for captivating headlines, the market factors that led to the 2008 bust do not exist today. The 2008 crash was fueled by subprime lending and squirrely practices, which led to people owning homes they couldn't afford resulting in precipitous defaults. Those practices do not exist today.
Spring is on the way.
Starting the home-search process today will give you a jump on the spring market, historically the most popular season for homebuying. Get a leg up on the competition by working with a lender on pre-qualification, which will let you know exactly how much house you can afford and fast-forward the process.
Reprinted with permission from RISMedia. ©2023. All rights reserved.