Should You Buy a House in Today's Market?

Should You Buy a House in Today's Market?

Chris Morris, CPA
4 minute read

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Declining rates have brought borrowers back to the market but as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers. – Sam Khater, Chief Economist at Freddie Mac

Most people are aware of the potential challenges that homebuyers are currently facing, including high interest rates, low house inventory, and a seller’s market. But these are not necessarily reasons to put off buying a house, depending on your individual financial situation. So how do you decide if it makes sense to move forward with buying a house in today’s market or not? 

  • Determine the why behind the buy. In more turbulent financial times (like today), it’s more important than ever to be perfectly clear on why you want to purchase a home. For example, if you want to stay in a home for only a few years and then move into a larger home, now might not be the best time to buy. Some experts anticipate that home prices will increase, but others say home prices will drop. With this uncertainty, it only makes sense to purchase if you are willing to stay in a home for at least the midrange. 
  • Consider the Mortgage rates. Mortgage rates continue to stay north of 6%, which hasn’t been the case since 2007. This is significant because it means that more of a mortgage payment will be going toward interest every month and over the life of the loan. As a result, most people are able to qualify for and afford less house than in the past. It’s important to know if a house that meets all your needs is in your price range or not, considering the interest you’ll pay.
  • At the same time, there is no guarantee that mortgage rates will go down any time soon. Even the experts have differing opinions on what the short-term future holds. Higher mortgage rates shouldn’t keep you from buying a house unless those higher mortgage rates have made purchasing a home unaffordable. 
  • Set an anticipated budget. Owning a home ends up costing more than you might think. The primary reason is that anything not covered by a warranty is your responsibility to fix. If the air conditioner breaks in July, it’s up to you to get a new one. Budgeting for home ownership before you buy is crucial. This budget needs to include more than just the mortgage, property taxes, and homeowners’ association dues. It needs to include an amount set aside each month for home maintenance and an allowance to save for big ticket items like that air conditioner. If you set a budget and realize that you will not be able to keep it when you purchase a house, now is not the right time to buy. 
  • Talk to a local real estate agent. Once you feel like you’re ready to begin searching for a house, connect with a local real estate agent. Ideally, you’ll want to interview more than one, then choose the one you have the best connection with. Your real estate agent will know the local market well enough to help you decide if the house you want to buy is in your price range and in the right neighborhood for you. 

Keep in Mind

If you’re in the market for a house, don’t be discouraged. Despite the challenges of today’s market, it still might be the right time for you to buy. 

©2023 Amplified Life Network

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