Should you buy a new home now?
Owning a home has many advantages: financial stability, not having to answer to a homeowner, and pride in achieving such a huge goal. But is it a good time to buy a house, or is it better to wait? Here’s what you need to know.
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Inventory is down
In May, there were around 31% fewer homes on the housing market compared to the previous year. Not only can a limited inventory make it more difficult for you to find a home that interests you, it also means that you are likely to face stiff competition.
In fact, many homes on the market today find themselves in bidding wars, where two or more buyers compete for the same property. Bidding wars can be extremely stressful, but these days they are quite common.
Another thing to keep in mind is that if you are a first-time buyer looking for a first-time home, you might have even more difficulty. While the housing stock is generally declining, there is a particular shortage of entry-level properties on the lower end of the market, making it difficult to enter as a home buyer. first house.
House prices are on the rise
Whenever a product is limited, its price can rise when demand exceeds supply. This is exactly what is happening in the real estate market today.
Home prices have skyrocketed nationally. In April, home prices rose 15.7% from the previous year. This means that if you are going to buy today, you will need more money for a down payment and you will consider taking out a larger mortgage to finance the house you are buying.
Mortgage rates are competitive
One positive thing about buying a home today is that mortgage rates are very competitive. At the time of this writing, the average interest rate for a 30-year fixed loan is 3.101% and the average rate for a 15-year fixed loan is 2.403%.
Admittedly, these levels are a little higher than they were last summer, when mortgage rates really hit an all-time low. But historically speaking, they are still very attractive. If you have a good credit score – that is, a score in the mid-700s or higher – then you are more likely to get a low mortgage rate which can, to some extent, help offset the cost of a more expensive house. .
Buy now or wait?
Many people are eager to enter the housing market today, given that mortgage rates are so competitive. But limited stocks and inflated house prices can be a challenge that you will struggle to overcome.
There is certainly nothing wrong with looking at for a home to buy in today’s market and see where it takes you. But if you’re struggling to find a property that meets your needs and budget, it may be worth waiting for the purchase until inventory opens and home prices drop.
The good news is that mortgage rates are expected to stay low for much of next year and most likely beyond. So, if you are unable to buy in the short term, you might not miss the opportunity to lock in an affordable home loan.