Is it a good time to buy a house? 07/01/2024
While mortgage rates are falling home prices are up and inventory remains low. Finding the perfect time to buy a home can be difficult and impossible. So when is it a good time to buy a house? While insights into housing market trends are valuable, determining whether it’s an ideal time for you to buy highly depends on your financial status, life objectives, and readiness to take on the responsibilities of homeownership. Here’s what to consider:
Mortgage Rates
Shop around for the best deals. Compare your overall payment and total fees associated with the rate you’re choosing. Many experts predict that mortgage rates will slowly decline into 2024. The 30-year rate has been falling for the past 10 weeks but this week mortgage rates ticked up to the highest levels in 4 weeks. As of January 9, 2024, the average 30-year fixed mortgage rate is hovering around 6.80%. In comparison, this is a considerable drop in the last 90 days where the average peaked at 8.03% in October of 2023. This 1.23% rate reduction on a loan amount of $500,000 translates to a $420/month reduction in payment.
A lower rate increases your buying power, but you’ll have to pay attention to the total cost of that loan.
Inventory
Home supply is still limited as the shortage of homes for sale persists. According to NAR (National Association of Realtors), there were only 3.5 months of inventory on the market versus an ideal inventory of 5-6 months of supply. Current supply suggests that it will only take about three and a half months to sell all the properties on the market. This is a decrease of 7.3% year-over-year.
Affordability
Home prices keep climbing. According to NAR, the median sales price increased by 4.0% year-over-year in November. Here’s a look at the median price and YoY price:
West: $603,200, up 5.3%.
Northeast: $428,600, up 4.8%.
South: $351,500, up 3.4%.
Midwest: $280,000, up 4.9%.
Speak to a couple of real estate agents to understand more about your local or surrounding area so you can make an informed decision. You do not want to overpay out of impulse and out of haste.
Competition
Many buyers are waiting for the opportune time. When mortgage rates fall those who have been waiting on the sideline will become buyers. Regardless of home prices going up the demand is outpacing the supply. Homes are receiving an average of 3 offers and there is still a steady flow of cash-buyers.
Are you ready?
Consider your current financial situation, the steadiness of your job, your relationship, and your life goals. So is it a good time to buy a house? Here are some questions to ask yourself:
How much do you currently pay for rent versus your monthly payment when you own?
How much money can you put down on a house?
How much do you have in savings for reserves?
How is your credit score?
How much debt do you have?
How long do you plan on staying in this home?
A mortgage payment doesn’t necessarily equate to a higher obligation. Your total monthly housing expense will depend on the size of your loan and at what rate. Having reserves that will last you a few months is as important as how much money you’ll be electing to put down on that new home. Payoff or pay down your credit cards as much as you can every month keeping your overall balance less than 30% of your credit limit is a good rule of thumb in obtaining high credit scores.
Consult with a loan officer to get a better idea of how far or how close you are to owning your first home. Then you can safely answer, is it a good time to buy a house?
