The housing market has experienced some drastic changes since the start of the pandemic. In particular, the high interest rates and low inventory we are now experiencing have greatly influenced many people’s decisions on whether or not to invest in real estate. Let’s examine some of the top reasons the timing may or may not be right for buying a home.
Why Buy Now?
There are plenty of reasons that potential homebuyers have decided that now is the right time for them to buy. The more obvious of these reasons include an immediate need to change their living situation, for instance, they have to move for work, or are expecting an addition to their family. Maybe now is the right time to buy if you have already found the perfect house for your specific location and needs!
Otherwise, the decision to buy in this seller’s market may be based on more subtle factors. Choosing to buy a house will almost always be a good investment, as home prices go up over time. For first-time homebuyers, purchasing a house without delay means that you can begin to build equity immediately, as opposed to staying in a rental for an indefinite amount of time.
The most important factor in your decision to buy a home is your financial means. If you have saved enough money for a down payment, with enough left over for the many other costs of buying a home, the cash will be better spent on a home than sitting around in your bank account! If you have a high credit score, you will also be in a better position to buy a home now than those who do not. Despite the current rising interest rates, a good credit score will help you secure the best mortgage rate possible.
If you are not perfectly confident in your finances, you may find that now is not the time to purchase a home. Especially if this will be your first real estate purchase, the process may cause far too much financial pressure to be worth your time. Similarly, in this current housing market, your chances of securing the property you are interested in are lessened by strong competition and offers over asking price. This may be the time to live below your means and strengthen your savings and credit score, which will help you avoid exorbitant interest rates.
If you are comfortable in your current living situation, regardless of your financials, you may be better off waiting for a change in the housing market while you secure the means for your ideal home. Though it is impossible to predict how or when the market will shift in the buyer’s favor, it cannot remain the same forever. Keep your focus on the housing market in the specific area where you are looking to buy, as it may be different from the overall market trends across the state or country.
In the spring of 2022, Bankrate examined some of the major barriers to homeownership:
“The primary reasons are not enough income (43 percent), out-of-reach home prices (39 percent) and being unable to afford a down payment and closing costs (36 percent). Other reasons cited were poor credit (22 percent), simply not being ready (22 percent), mortgage rates that are too high (17 percent), lack of inventory of homes for sale (13 percent), and having too much debt (13 percent).”
Many people who are interested in home ownership have said that they are willing to take other steps toward finding more affordable living in the current housing market. The top concessions they are willing to make include moving out of state, buying a fixer-upper, and moving farther from family, friends, and work. Finding a house in 2022 may require some sacrifices to your original plans or vision of a dream home.
Trying to predict the housing market is a Sisyphean task. The decision to buy a house is an entirely personal one, based on your current needs and means. A local real estate agent will be able to help you assess the local market as it relates to your housing goals to help you decide if the timing is right. If you are interested in purchasing a home in NorthShore Massachusetts or have further questions, please contact me today.