NEPA Real Estate Corner

Is Now a Good Time to Buy a House?

Jun 24, 2024 | Uncategorized

In the world of real estate, the question on everyone’s lips is, “Is now the right time to buy a house?” Like a harmonious melody, the answer isn’t a simple yes or no. It dances through various factors, each playing its part in this complex orchestration of market trends and personal finances.

The Current Market Landscape

The housing market is like a grand stage, with performances varying from one act to another. Recently, the market has been quite a spectacle, with high prices and fluctuating mortgage rates taking center stage. According to the National Association of Realtors (NAR), homes are spending more days on the market than they did last year, giving buyers a little more time to make their decisions. In April 2024, homes typically spent 26 days on the market, up from 22 days in April 2023. This change indicates a slight shift towards a buyer-friendly environment.

Moreover, housing inventory is rising, albeit gradually. NAR reports a 16.3% year-over-year increase in available homes, which means more options for buyers to choose from. This slight uptick in inventory can ease the pressure of bidding wars and give buyers some breathing room to find the perfect home.

The Case for Buying Now

Imagine the joy of moving into your own home, a place where you can hang your favorite pictures without worrying about losing your security deposit. Buying a home now allows you to start building equity immediately. Instead of paying rent to a landlord, each mortgage payment chips away at your loan, increasing your ownership stake in the property.

Despite mortgage rates hovering above 7%, there’s a silver lining. Locking in a mortgage now can protect you from future rate hikes. As Melissa Cohn of William Raveis Mortgage advises, “Marry the house and date the rate”—you can refinance when rates drop, but the opportunity to buy your dream home might not wait.”

Buying now also means you won’t be caught in the uncertainty of future market conditions. Stacey Froelich, a broker with Compass, notes that you can’t perfectly time the market. If you find a home you love and can afford, it might be better to act now rather than risk missing out.

Reasons to Wait

On the other hand, there’s wisdom in patience. If home prices in your area are on a downward trend, waiting could save you money. Some markets, like Austin, Texas, have seen significant price drops. Redfin data shows a decrease in the median home price from $620,000 in June 2022 to $570,000 in April 2024. If similar trends continue, waiting might mean getting a better deal.

Additionally, if your financial situation isn’t perfect, waiting could be beneficial. Improving your credit score, saving for a larger down payment, or waiting for a potential windfall can put you in a stronger position to buy. Mortgage lenders favor those with excellent credit scores and substantial savings, so a bit of financial housekeeping can go a long way.

Key Considerations

Your personal financial situation plays a critical role in this decision. Do you have a stable job and a robust savings account? Are you planning to stay in the home for several years? These factors are crucial. Buying a home is a long-term investment, and it’s essential to ensure your finances can support this commitment.

Benefits of Buying Now

  • Building Equity: Each mortgage payment increases your ownership stake.
  • Protection Against Rate Hikes: Locking in current rates can shield you from future increases.
  • Personal Stability: Owning a home provides a sense of permanence and freedom to personalize your space.

Reasons to Wait

  • Falling Home Values: Waiting might save money if prices in your area are declining.
  • Improving Financial Situation: Better credit scores and larger down payments lead to better loan terms.
  • Increased Inventory: More choices might be available if you wait a bit longer.

Analyzing Local Markets

Real estate is a local game. What might be true for one city could be completely different for another. For example, while Raleigh, NC, saw a 9% increase in home prices, nearby Chapel Hill experienced a 24.4% drop. Understanding the trends in your desired area is essential. A knowledgeable local real estate agent can provide invaluable insights and help you navigate the nuances of your specific market.

Locally, the imbalance between supply and demand has kept prices high despite higher interest rates. The higher rates have seemed to impact sellers more dramatically than buyers. There are millions of people nationwide who might really want or need to sell their home and buy a new one (moving for work, changing family needs, etc.) but are locked into 3% or lower interest rates from 2020 to 2022. These homeowners are reluctant to sell and give up their super-low rate, even if they need a new home.

Despite this, nice properties in premium areas are still seeing very short days on the market. Priced right, these properties are still resulting in bidding wars, over-asking-price sales, and terms beneficial to the seller (waived inspections, appraisal gap contingencies, etc.).

The Recession Question

There’s also the looming question of a possible recession. Bankrate’s most recent survey puts the odds of a recession within the next 12 months at 33%. Recessions can make buying a home riskier, especially if job security becomes a concern. However, buying during a recession can have its perks, like less competition and potentially lower prices, if you’re financially stable enough to weather the storm.

The Singing Realtor’s Thoughts

My general thoughts on “Should I buy a home now or wait?” If you need to buy a home and can, you are often better off buying now. Those who waited in 2022-2023 for “prices to come down” or for “this bubble to burst” have just seen prices continue to climb, and rates hold steady in the high 6% to low 8%. So not only have they not found a house, but it’s also gotten more expensive.

Next Steps

Deciding whether to buy a house now or wait requires a thorough evaluation of your personal finances and the local market conditions. Talk to an experienced local real estate agent, like me, The Singing Realtor, review your financial situation, and consider your long-term plans.

In the grand concert of life, finding the right time to buy a house is like hitting the perfect note. It requires a blend of timing, preparation, and sometimes, a bit of luck. Whether you choose to buy now or wait, ensure your decision is well-informed and aligns with your financial goals and personal circumstances.

Additional Tips

  • Consult with Experts: Always get advice from real estate professionals and financial advisors.
  • Stay Informed: Keep an eye on market trends and financial news to make timely decisions.
  • Be Flexible: Sometimes, adjusting your expectations can lead to finding hidden gems in the market.

Deciding when to buy a house is a personal journey, filled with highs and lows, much like a beautiful piece of music. By understanding the market, your financial readiness, and your long-term plans, you can make the decision that best suits your needs and goals. So whether you decide to buy now or wait, ensure your choice is harmonious with your life’s melody.