Is It a Good Time to Buy a House?
From having enough money saved to ensuring a great stimulus to the real estate market, here are seven answers to the question, “Do you think it is a good time to buy a house?”
- Maybe: Depends on Your Financial Position
- Yes: You Can Avoid Increasing Mortgage Rates
- Yes: Mortgage Rates Have Dropped Significantly
- No: The Confidence Index is Low
- No: You Could Lose Your Asset Value
- No: the Current Economy Will Destroy You Financially
- Yes: Increased Inventory and Deceleration of Inflation
Maybe: Depends on Your Financial Position
There is never a good or bad time to buy a house. The key question is whether you are in a good financial position to buy a home. Do you have sufficient income, savings, and credit score?
Having enough money saved for a down payment, and budgeting for the additional costs that come with buying a house are essential aspects of being able to afford a home.
Before you purchase a property, consider whether you can sustain the ongoing costs associated with homeownership. The costs will vary depending on where you live, but this includes mortgage payments, taxes, insurance, and maintenance.
Finally, consider that real estate is a long-term investment. If you’re looking for short-term gains in the housing market, then buying a house may not be right for you. But if you’re ready to commit to homeownership and plan on staying put for a while, then it could be a great time to buy.
Peter Lucas, Owner, Relocate to Andorra
Yes: You Can Avoid Increasing Mortgage Rates
You should make an immediate property purchase. You might start building equity right away if you buy now. That is true regardless of how the housing market is currently trending.
But a key feature of the current economy is that making a purchase now means avoiding potential future increases in mortgage rates. Buyers should act quickly if they find a home they want to call their own.
Given that it is impossible to time the market, consider a property a long-term asset. If a buyer has borrowing, higher mortgage interest rates may ultimately cause them to pay more each month. Cost increases could seriously jeopardize their financial plan.
Samantha Odo, Real Estate Expert and COO, Precondo
Yes: Mortgage Rates Have Dropped Significantly
Because mortgage rates are currently lower in February 2023, it is a good time to buy a house, particularly for first-time buyers. Mortgage rates reached an all-time high twelve weeks ago. They’ve dropped significantly this month.
According to Freddie Mac, the average 30-year fixed-rate conventional mortgage rate in February 2023 is 6.13%. When mortgage rates are low, borrowing money to buy a home becomes more affordable, allowing potential buyers to qualify for a larger loan or afford a more expensive property.
A lower mortgage rate may also mean that homebuyers can save money on interest payments over the life of their loan. Even a minor reduction in the mortgage rate can cause significant savings.
Johannes Larsson, Founder and CEO, JohannesLarsson
No: The Confidence Index is Low
Knowing that listings are increasing, prices are dropping, and interest rates aren’t rising as quickly doesn’t mean it’s a good time to buy a house. You should consider quite a few things before you decide to buy a house.
The housing affordability index sits at 101.7 as of the end of December. The affordability index tells you how well the typical American family can afford a home and a score over 100 means it’s easier to afford a home.
Even though a home seems to be affordable and home builders believe conditions are improving, the home builder confidence index sits at 42, which is almost half of what it was a year ago. The confidence index is a survey of home builders in which they rate current sales compared to the next six months and expected traffic.
This still tells me there’s a supply issue. The supply issue isn’t permanent, so if you’re lucky and find the right house at the right rate, buy it. Otherwise, it’s best to wait out this market cycle.
Brian Wittman, Owner, SILT Real Estate and Investments, LLC
No: You Could Lose Your Asset Value
Unfortunately, this year may not be the right time to buy a house. House prices are at an all-time high and you risk losing asset value if you buy a house this year because of the forecasted recession. In 2020, the national median existing-home price was just a little over $265,000.
Today, the national median list of home prices is up to more than $400,000. That kind of price increase in such a short period shows a bubble market. If history taught us anything, bubble markets, such as the US Housing Bubble of the mid-2000s, pop, causing massive losses to investors and consumers.
I predict a severe economic recession coming shortly. Loss of income, job losses, and credit tightness are some of the immediate effects of a recession. Here, demand for homes and real estate will decline as more people and potential buyers can no longer afford the inflated prices. Prices will most likely follow demand and fall as well.
Jonathan Merry, Founder, Moneyzine
No: The Current Economy Will Destroy You Financially
Though buying a house is one goal for many people, we should only do this in a good economy. Right now, the world economy is still trying to avert all the effects caused by the pandemic, the war, and everything that followed it.
Many countries have imposed higher taxes and loan interests in order to save their economies from falling. Buying a house during this time will just expose you to higher interest rates and the house may even become a big liability if the market suddenly crashes too low.
Prices for houses are still high right now, so you’d be paying a higher amount than its supposed value if you buy one right now.
Steven Mostyn, Chief Human Resources Officer, Management.org
Yes: Increased Inventory and Deceleration of Inflation
Yes, it is a good time to buy a house because of two reasons: increased real estate inventory resulting in competitive or even lower prices, and the deceleration of inflation ensuring a great stimulus to the real estate market.
Previously, because of the rough times in the economy, construction companies had an increase in their inventories. In addition, many people also opted to put their property up for sale to increase the liquidity of their assets.
These two things culminated in an increase in the availability of properties, thus making real estate prices vulnerable. Besides this, the expectation is that with the deceleration of inflation that is already occurring, the real estate market will confidently offer many options of all kinds, for all tastes.
Kiel Laciera, Broker and Director, SKYHUB