Deciding you’re ready to buy a house is a big moment in your life, whether it’s a first time purchase or you’re snatching up yet another investment property. The home buying process is fraught with dangers, both real and imagined, as well as very real financial risks.
That’s why there are so many pieces of advice about when to buy a house. The truth is that there’s no one answer for anyone. Because market conditions can vary dramatically, there’s no way to safely predict if or when the neighborhood you’re looking at will be ripe for the picking. These are the times when having a really knowledgeable Realtor comes in handy.
Today’s Real Estate Market: An Overview
You should have some idea of what you’re walking into before you jump in the real estate market. Sometimes, there’s way too much supply (too many houses for sale) and not enough buyers — this is a “buyer’s market,” and that’s who has the upper hand in negotiations. Sometimes there are too many buyers and not enough supply — a “seller’s market.” Often, there are roughly balanced parts supply and buyers, which makes for a very healthy and predictable market.
We’re not in a healthy and predictable market at the national level. There are currently way too many buyers who want to buy at any price and not nearly enough new homes being built, nor are there enough existing homes to meet demand. Generally, this would push prices up. However, since interest rates are increasing, some buyers are starting to get squeezed out of the market entirely, which should be pushing prices back down, but doesn’t seem to be.
What we seem to have right now, as of the writing of this blog, is a market that’s sort of stalling. Normally, the summer is the craziest time of the year for Realtors — no one wants to pull their kid out of school mid-year to move across the city. And although many Realtors are reporting that they have plenty of potential, well-qualified buyers, they’re fighting over scraps as the supply continues to shrink.
Should You Be Trying to Buy Right Now?
Depending on who you are and where you are in your life journey, the competitive, weirdly stalled market we have this year may be as good a time as any for you to buy. Below is a brief breakdown of major buyer types and how the market could affect them if they were to buy today:
First time homebuyers. Jumping into the real estate market as a first timer is always a little terrifying, but the current market may give you a serious complex. If you’re buying a house to live in, not one that you expect will make you a bundle down the road, and your life is fairly settled, there’s no time like the present to go down the home purchase road. Just bear in mind that you will probably have to write several offers before you land that starter home — give yourself plenty of time for houses that will get away.
Maturing family. When you’re looking for that last house, the one you’re going to send your kids away to college from, the most important thing is finding a house that’s suitable for your family. There’s no time that’s better or worse for this purchase, especially if your plan is to hold it indefinitely. Sure, you may end up paying a little bit more now than you would have a couple of years ago, but the value you get from living in the house, as well as natural appreciation, generally ensure you come out a little bit ahead. It beats renting, anyway.
Empty nester. Aging in place is the thing these days, and for good reason. That just creates one big problem: not enough inventory that will accommodate mobility equipment like walkers and wheelchairs that you may ultimately need. Housing starts are really rising, though, so you might as well visit a few Open Houses to see if there’s a builder out there that you can picture building the home where you’ll retire. Although existing homes can work for your needs, new construction gives you the option to create an age in place friendly universal design from the foundation up.
Investor. Investors! You are literally the only group on this list that should be seriously concerned about the timing of your purchases. Since owner-occupied homes tend to be held for the long term, the risk to those buyers is minimal, but you’re looking to buy and almost immediately start making money.
Finding a good price on a listed home may be tricky right now, but switching gears to the building of new homes will introduce a lot of competition. Buying and holding properties as rentals could pay off, but only if you really buy them right. Now may not be a great time for you to buy if you have investments that are already paying for themselves. It would, however, be a pretty good time to unload properties that you’ve fully depreciated or those that just really don’t fit in with your portfolio.
When it comes down to it, the biggest factor you should be considering when purchasing real estate that you intend to occupy is whether or not you’re really ready for homeownership. A close second, of course, is whether or not you can really afford a house, but your Realtor and mortgage lender will help you with that part.
You’ll have to decide for yourself if today is a good day to buy, there’s no way to know what the market will look like in five to 10 years when you may want to buy again.