- Don’t Time the Housing Market. Here’s Why You Should Buy When You’re Ready
- When Should You Buy a House?
- You Have Stable Income
- You Have a Handle on Your Debt
- You Have Enough Savings
- Your Credit Score Is Good
- You’re Ready to Settle Down
- Consider the Real Estate Market You’re In
- Are we trapped in another housing bubble? A rapid rise in home prices has some experts worried
- Homes for sale have dwindled
- An out-of-balance housing market
- Rental market is humming
- Home prices gone wild
- Housing Market Forecast 2021: How Hot Will It Be?
- Your Housing Market Forecast for 2021
- Plenty of Home Buyers Will Enter the Market
- Not Enough Homes Will Be Listed for Sale
- How Fast Will Homes Fly Off the Market in 2021?
- Will There Be a Lot of Foreclosures in 2021?
- Is the Housing Market Going to Crash in 2021?
- What Does This Mean for Home Buyers in 2021?
- What Does This Mean for Home Sellers in 2021?
- How to Buy or Sell With Confidence in Any Housing Market
- ‘The housing market is on a sugar high’: Home sales are soaring, but is it a good time to buy? Here’s what the experts say
- Interest rates remain near all-time lows
- There aren’t many homes for sale
- Competition is driving faster sales and higher prices
- Where you live and the lifestyle you lead are important
Don’t Time the Housing Market. Here’s Why You Should Buy When You’re Ready
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Housing inventory is low, but demand for houses is high. And with mortgage rates at historic lows, many homebuyers are finding themselves in bidding wars and sometimes competing with all-cash offers.
That means homes are selling for well over asking price in the most competitive markets, according to housing experts we spoke to. They say 2020 has been a strong seller’s market — and 2021 is ly to be too.
If you’ve been thinking about buying a home, you might be wondering if it would be better to hold off a bit until the market is more favorable for buyers. Experts say there’s no perfect time to buy a house, and the best time is when it makes sense for you personally.
And price is not the only factor at play, either, especially when the U.S. economy is still in recession from the coronavirus pandemic.
Many people are being enticed by low interest rates, says Adriana Buenrostro, a real estate agent with Prosper Real Estate in Santa Rosa, California. “That’s great — if you have the down payment, the steady income, and the reserves,” she says. “If you don’t have enough money or your job is unstable, that all gets iffy.”
If you’re debating whether to buy a house or wait, here’s what to keep in mind:
When Should You Buy a House?
Owning a home has long been considered an essential part of the American Dream. But it can also turn into a nightmare, if you buy a house before you’re ready. Here are five signs you’re ready to buy a home.
You Have Stable Income
It’s critical to feel financially secure before you buy a house. If you’ve had a steady stream of income for at least a few years, that’s a good sign you’re ready to take the leap toward homeownership.
“We are living in the middle of a pandemic, and with COVID-19, you want to make sure you have a stable job. Right now in the current times, that is huge,” says Buenrostro.
Lenders want to see a consistent history of employment to ensure you have enough money coming in to cover the cost of a mortgage. The majority of lenders ask for your last two years of W-2s, and some will even ask for pay stubs right up until closing.
If you’re self-employed, be prepared to show your tax returns for the last two years instead. If you received any 1099s during that time, you’ll also need to show those to your lender.
Fundamentally, while lenders cannot forecast whether you will be employed in the future, they want to see proof that you’ve been steadily employed in the past, and that you have therefore enjoyed a stable income.
You Have a Handle on Your Debt
The next thing to take into account is your debt-to-income ratio (DTI) — a measure of how ly you are to be able to afford monthly mortgage payment, given your current debt and your monthly income.
Your DTI typically includes bills student loans, car payments, and credit card debt, but not living expenses such as food, gas, and utilities. While maximum DTI levels vary by lender and mortgage type, most lenders are looking for a DTI that’s less than or equal to 43%, according to the Consumer Financial Protection Bureau.
The lower it is, the better. If your DTI is higher than that, prioritize paying down your debt before jumping into the real estate market.
To find your DTI, add up all of your recurring monthly debts and divide that number by your total monthly income after taxes. Then, multiply it by 100 to get your percentage.
You Have Enough Savings
Your lender will also want to verify that you have enough savings to cover the upfront costs of buying a home, and then some.
In particular, you should save enough to pay for the down payment and closing costs.
Depending on the type of mortgage you get, a down payment can be anywhere from 3.5% to 20% of the home’s purchase price. Closing costs usually make up an additional 2% to 5% of the home’s purchase price.
Lenders also to see enough in your accounts to cover future mortgage payments and emergency expenses.
“I to see people not only have enough for a down payment, but also have three to six months in reserve because we don’t know what will happen,” says Buenrostro.
She says there have been a few times during the final stages of the process where she’s seen one of the borrowers applying jointly for a mortgage lose their income, and have to see whether they had enough reserves to offset that income loss.
“Unfortunately, the answer for some of them has been no,” says Buenrostro.
Your Credit Score Is Good
Lenders use their own credit scoring models to determine how risky a borrower you are. Before the pandemic, good credit was considered to be the high 600s or low 700s, says Dan Moralez, a mortgage lender and regional vice president with Northpointe Bank in Michigan. Now it’s moved up into the mid-700s and higher, he says.
You should check both your credit report and credit score before starting the homebuying process. You can check your credit report from all three main credit agencies for free every year — and until April 2021, every week. Your credit score can be checked by visiting a free credit score website, or in many cases looking it up in your online credit card account.
The pandemic has made lenders more cautious, so be sure to check your report closely for any inaccuracies that might affect your creditworthiness.
“Everything is a little stricter because of the times we’re living in. Having good credit always helps. It’ll benefit your rate, your mortgage insurance, and it’ll give you more buying power. Right now, guidelines and loans are changing daily, as well as the interest rates,” says Buenrostro.
You’re Ready to Settle Down
Buying a house isn’t cheap. You’ll have to pay thousands of dollars right off the bat just to live in your new home, including closing costs associated with your mortgage and a down payment.
You should buy when you know that you are committed to staying in one place for an extended period of time.
“It’s important to consider your long-term goals,” Moralez says. “Often, first-time homebuyers are just getting started in their careers, so are they planning to stay local or will they have a job change that can move them?”
Keep in mind too that selling your home in the future may also be a hassle, and will be expensive since the seller typically pays commission to a real estate agent.
With all of these costs, it makes more financial sense to stay put for at least a few years after buying. It’s very hard — if not impossible — to make money on a home unless you plan to stay in it for a while, says Moralez.
Consider the Real Estate Market You’re In
Once you find a house you want to make an offer on, Buenrostro and Moralez say you should not delay, even if market conditions favor sellers over buyers.
Those market conditions will largely determine how much wiggle room you have when making an offer. Many houses are selling substantially over asking prices, says Buenrostro.
“Our market here is very competitive. Everything is still going over asking, with multiple offers.
There’s a lot of cash in the market right now and buyers are coming in with 20% down on conventional loans,” says Buenrostro, who’s based in California’s Sonoma County.
“But I encourage my clients to keep looking because you never know. You want to be ready to jump on that train if a good opportunity comes by.”
Buenrostro says a good real estate agent will pull comparable home sales in your area for you, talk through pricing and market conditions, and work with you to determine a fair offer.
But be prepared for disappointment in a competitive market. Counteroffers are common, and so is rejection. Even if everything is going smoothly, the seller may still be able to entertain and accept other offers. And even after a contract has been signed, issues can occur and the deal could fall apart.
There are things you can and can’t control during the homebuying process. One thing you can control is how high you’re truly willing to go. Set a budget from the beginning and keep to it when you make your offer.
“I don’t think there’s a magical formula to buying a home. People just need to be informed, be able to knock out these items, get ready and line up their debts,” Buenrostro says. “And if it’s the right time, then the right home will come.”
Are we trapped in another housing bubble? A rapid rise in home prices has some experts worried
In the midst of a raging COVID-19 pandemic, with millions of Americans still work and facing the possibility of eviction and foreclosure, the United States is experiencing a real estate boom the s of which it hasn't seen in 15 years.
Home prices are rising practically everywhere. From Augusta, Maine, to Phoenix and from Sarasota, Florida, to Aberdeen, Washington, prices are up by double digits.
Driven by historically low interest rates that make borrowing cheap and waves of people fleeing densely populated cities because of COVID-19, home buying has become as competitive as it was during the boom years of the mid-2000s.
Rapid price rise: US home prices rise nearly 8% — fastest pace in more than 6 years — driven by COVID-19 pandemic moving trends
Low mortgage rates: Amid surging COVID-19, Fed could take steps to lower mortgage rates, boost economy
Homes for sale have dwindled
Supplies of existing dwellings have dwindled far below the six-month level considered normal. Realtors are receiving multiple offers. Builders can't keep up with demand and flipping is back.
Talk of a housing bubble is now common among analysts – including those at Swiss banking giant UBS, who back up their claims with charts showing how home prices are outstripping both wages and rents.
While home prices have appreciated more than 60% since November 2012, incomes have only appreciated by 20% and rents by 30% over the same time period.
The upshot: Homes are reach for more and more buyers every year, the analysts argue.
But un the real estate boom that led to the Great Recession, this nationwide price spike is not being fueled by a wholesale collapse in lender ethics. There aren't any low-doc or no-doc loans to be had and borrowers are having to do much more than fog a mirror to get funding.
Supply and demand fundamentals can also fuel rising prices.
“For over a decade, we've had a chronic lack of supply of housing,” said Marco Santarelli, chief executive of Norada Real Estate Investments in Laguna Niguel, Californi. “We need 1.62 million units a year to keep pace with organic demand, but we produce significantly less. We're about 370,000 units short each year.”
Marco Santarelli, founder and CEO, of Norada Real Estate Investments.Courtesy
Santarelli added that the supply imbalance will only get worse as more than 140 million millennials and members of Gen Z move into rental units and starter homes in the years ahead.
“About 52% of young adults from 18 to 29 are still living with their parents,” Santarelli said. “That's the highest rate in over 110 years. These people have to go somewhere and that's why I'm so bullish about real estate over the long term.”.
An out-of-balance housing market
But these healthy fundamentals don't mean there aren't worrying distortions in the market.
With the Federal Reserve continuing to buy Treasury bonds and other securities under its quantitative easing program, interest rates are being held artificially low as dollars are being pumped into the economy. That makes borrowing cheap and encourages investors to buy riskier assets stocks and real estate, driving prices of those assets ever higher.
Until the Federal Reserve halts its bond buying and interest rates begin to rise again, real estate prices will continue to climb, says Robert Goldman, a real estate agent with Michael Saunders & Co. in Sarasota. And no change in policy is expected any time soon.
“The Fed will keep buying bonds far into the future despite what could be a booming economy in 2021 and 2022,” Goldman said in his monthly newsletter.
“We had a 10.2% increase in home prices in Sarasota in 2020,” Goldman told USA TODAY. “What I'm concerned about is that prices will continue to appreciate at 10% to 15% a year and that's not sustainable.”
At a certain point, interest rates will rise and there won't be enough buyers coming in from more expensive markets to keep paying the higher prices. Either development or both, could lead to a pullback in prices.
The moratoriums on evictions and foreclosures are also distorting the market. There's no question these policies are needed to keep people from being displaced in the midst of a pandemic, but they will eventually have to be lifted and it is not clear what will happen when they do.
Santarelli is confident the damage will be minimal. He believes renters will find jobs when the economy rebounds and they will not join the legions of the homeless. He also believes homeowners will either be able to sell their houses and condos and walk away with equity, or refinance or modify and tack whatever they owe to the back end of their mortgages.
“We saw people's equity grow 11% last year and it's expected to grow another 6% this year,” Santarelli said. “So the appreciation is in their favor. They can sell or refinance and banks are well off either way.”
If homeowners can't sell or refinance, there could be a spike in foreclosures and the supply of homes on the market would increase sharply, pushing down prices.
Rental market is humming
Meanwhile, the segment of the real estate market that seems to be working most efficiently at the moment is the rental market. As people leave densely populated cities to escape COVID-19 and congestion, rents are dropping. In San Francisco, rents fell 24% in 2020, according to Zumper.com, which tracks rents across the country. They were down nearly 20% in New York and 17% in Boston.
In cities Newark, New Jersey, Sacramento, California, and Richmond, Virginia, where people are relocating, rents are moving sharply in the opposite direction.
“The top eight cities in the nation, which were very hot and very millennial heavy, have seen enormous declines in rent, while secondary cities in the same regions have benefited,” said Anthemos Georgiades, co-founder and chief executive of Zumper.com.
Median home prices in cities experiencing major out-migration, however, have not fallen – at least not yet. New York, for instance, saw rents drop by 20%, but its median home prices rose 6%. The same trend holds true in San Francisco, Boston, Los Angeles and Washington, D.C.
Georgiades says that's because the rental market is much more dynamic than the “for sale” market.
“Rent prices adjust super quickly to the realities of the market,” Georgiades said. “If I get a vacancy in April, the clock is ticking. I've got a depreciating asset. I'm going to drop my price fast to get someone in there.”
Anthemos Georgiades, founder and CEO of Zumper.Courtesy
Homeowners looking to sell their properties are willing to be more patient, he said. So prices don't adjust as quickly.
According to Norada Real Estate Investments, San Francisco's infamously hot real estate market has cooled of late. But inventories of unsold homes are still tight and that's why prices aren't declining.
The reality in New York is different.
Norada is reporting that there are now more homes on the market in the city than there are buyers who want them, which puts buyers in the driver's seat when it comes to downward price negotiations.
It's cities this that should see prices decline first, according to prominent Yale economist Robert Shiller, and he advised homebuyers in a New York Times column “to avoid investing in too expensive of a house or in taking on too much risk.”
Home prices gone wild
For Mark Stapp, a real estate professor at Arizona State University, what's going on in the real estate market right now is not a bubble.
“The definition of a bubble is that when it pops, there's nothing there,” Stapp said. “That's not this case. There's very real demand that exists and that's what's causing prices to increase.”
Realtors across the country generally agree.
Mary Jo Santistevan, a top producing sales associate with Berkshire Hathaway HomeServices in Phoenix, said buyers are flowing in from congested cities of California, Washington state and the Midwest.
They are looking to take advantage of Arizona’s lower home prices, lower property taxes and quality of life.
But they are confronting a situation where inventories of unsold homes have been dropping steadily in recent years and are now teetering on a one-month supply in some areas and less than that in others.
Mary Jo Santistevan, a sales associate with Berkshire Hathaway HomeServices in Phoenix.Courtesy
“Even builders are struggling to keep up with demand,” Santistevan said. “There’s a 10-month wait time for construction. The majority of builders are using a lottery system. One builder in particular in Gilbert had a waitlist of 100 deep.”
Stacie Lee, a fellow agent at Berkshire Hathaway, says whenever something goes on the market in Phoenix, the showings are usually back-to-back and closing comes within a matter of days.
“Many homes go for $30,000 to $40,000 over list price and a few homes in the mid $300,000s have sold for $100,000 over list,” Lee said. “A lot are going for cash. Cash is king right now.”
Stacie Lee, a sales associate with Berkshire Hathaway HomeServices in Phoenix.Courtesy
Lee added that she had 70 people show up for an open house over the summer and had 15 offers in the first couple of hours. The home sold for $375,000 and is now back on the market at $550,000.
“There’s a lot of investors flipping homes here,” she said.
Nearly 3,000 miles away in Augusta, Maine, the housing market is just as frothy.
Fifteen of Maine’s 16 counties experienced a 10% increase in median home prices in 2020, according to Aaron Bolster, president of the Maine Association of Realtors. Some of those counties saw leaps of 20% or more.
“We already knew Maine was popular,” Bolster said. “More than 32 million people visit between Memorial Day and Labor Day. They don’t typically come at this time of year. But in a pandemic, it’s a safe place to be. The population density is very low and teleworking suddenly got popular in 2020.”
Home prices are rising practically everywhere in the U.S.Getty Images
Bolster said 25% of buyers in 2019 came from state. Last year, that number rose to 33%. Without a large housing stock to begin with, available listings got siphoned off pretty quickly as state buyers bid up the prices.
At the moment, there are only 6,000 homes for sale in the entire state, Bolster said, and half of them are under contract.
The situation is unique for Maine and Bolster is not sure how long it will last, especially given that the demand is driven by people coming from state – many of whom will presumably be able to work from home – and not by job creation within Maine's borders.
“Maine doesn’t create a lot of new jobs,” Bolster said. “When we create a new job, we give one up. So real estate doesn't usually appreciate that fast. It’s interesting to see such a robust market when it’s not really tied to economics.”
Graphics by Janet Loehrke, George Petras, USA TODAY
Housing Market Forecast 2021: How Hot Will It Be?
So you’re hoping to buy or sell a home and want to know what the housing market forecast is —especially after such an unpredictable year. Well, keep in mind that no one can predict what’s going to happen with 100% accuracy. But we can check out what real estate experts are seeing and make some guesses about the future from there. (Hint: It’s looking strong!)
Remember, housing market predictions can only give you an idea of what to expect if you buy or sell a house this year. But never let them dictate your housing decisions—only your personal situation and finances should do that.
With that said, let’s take a closer look at how the market is doing.
Your Housing Market Forecast for 2021
Get your fireworks ready because the housing market for 2021 could be a blast! Experts predict a post-pandemic rebound—we’re talking steady mortgage rates, job recoveries, and the law of supply and demand all working together to spark a match that will make home sales go kaboom!1
Find expert agents to help you buy your home.
That’s right, forget the slow start to 2020 where all the unknowns of the pandemic outbreak had home buyers and sellers feeling a bit shy to pull the trigger. Real estate agents have had a full year to adopt new ways to respect social distancing guidelines when necessary. And with super low inventory, pent-up buyers are scratching and clawing to enter the market.
Real estate gurus believe low mortgage rates and the rise of remote workers with flexible schedules will keep home sales booming in 2021. For the math nerds out there, here’s a snapshot of what that could look numbers-wise:
|Housing Market Predictions||2021|
|Existing home sales||Up 9%|
|Newly built home sales||Up 21%|
|Home prices||Up 8%|
|Mortgage rates (30-year fixed)||At 3%2,3|
For a better understanding of what that means for you, let’s take a deeper dive.Remember, these numbers are only predictions made by people who study the housing market. In other words, while the numbers will probably change here and there as experts crunch new data, the bottom line will mostly stay the same: Home sales and prices are ly to be higher in 2021 compared to last year.
Plenty of Home Buyers Will Enter the Market
Just before we rang in the new year, real estate agents across the country were asked to describe their market how many buyers were looking for homes and how many sellers were selling their homes. Check out the first map to see how hot the buyer traffic was in your neck of the woods:
As you can see, buyer traffic has been piping hot in 22 housing markets and pretty strong throughout most of the country—a great sign for sellers.
Not Enough Homes Will Be Listed for Sale
On the other hand, the amount of homes listed for sale are down 22% compared to last year.4 The next map shows how the majority of markets are looking somewhat slow when it comes to seller traffic—so buyers will have to work a little harder to find their dream home.
How Fast Will Homes Fly Off the Market in 2021?
Before the start of 2021, existing homes were typically on the market for just 21 days—meaning houses were plucked off the market two weeks faster than a year ago.5
That’s great news for sellers who are itching to get their homes sold fast. But buyers need to stay focused! You won’t want to dawdle once you find your best home because it’ll ly be gone if you wait too long to commit.
Of course, every market is a little different—here’s a state-by-state breakdown so you can see about how many days existing homes stayed on the market in your area.
Will There Be a Lot of Foreclosures in 2021?
Projections show that 225,000–500,000 homeowners across the country might face foreclosure (eviction for missing mortgage payments) in 2021.6 Is that more than normal? Yes. For perspective, experts predict that in spring 2021 the amount of foreclosures will more than double compared to the same time last year.7
Why the increase? Well, those projections are mostly job losses connected to the pandemic. Imagine how hard it’d be for a homeowner to keep up with mortgage payments after losing a stable job and income. If that’s you, hang in there. There’s more you can do to avoid foreclosure tightening up your monthly budget and finding multiple jobs.
On the other hand, what do more foreclosures mean for home buyers? You might find a sweet discount! But keep in mind, buying a foreclosed home could come with its own set of potential issues. So make sure you do your homework on the house and know what you’re getting yourself into before you buy.
Is the Housing Market Going to Crash in 2021?
It’s pretty unly that the housing market will crash within the next two years at least. Remember, real estate experts predict that home prices will increase by 8% in 2021—and from there, they’re projected to grow at a slightly slower rate of 5.5% in 2022.8
With new buyers continuing to enter the market and not enough homes for sale to meet demand, home sales and prices are still going up. On the other hand, if the number of houses for sale was crazy high and the number of buyers willing to buy them suddenly plummeted, home prices would get slashed and that’s when a crash would be something to worry about.
What Does This Mean for Home Buyers in 2021?
Okay, so far it looks you’ll need to bring your A game if you want to buy the home of your dreams this year. With more buyers than sellers, you’ll probably be up against some heavy competition. But don’t worry—there’s a bright side for buyers too.
If you’re getting a mortgage, you might still be able to get a low interest rate in 2021. The annual average interest rate for a 15-year fixed-rate mortgage in 2020 was only 2.61%—the lowest it’s been since Freddie Mac started reporting nearly 30 years ago!9
Sure, rates might start to increase a little in 2021. But you’ll probably still have a good chance of locking in a lower than average one. A low rate means a lower monthly payment and less of your money going toward interest over the life of the loan. Woo-hoo!
What Does This Mean for Home Sellers in 2021?
Sellers out there can feel pretty good about 2021. There are still plenty of buyers in the market and not as many sellers to compete with you. If you work with an experienced agent, you’ll be able to set the best home price and find the right buyer. You should have no problem selling your house this year.
How to Buy or Sell With Confidence in Any Housing Market
The housing market isn’t known for being simple to predict. That’s why it pays to have an expert in your corner. To connect with an agent who has weathered the storms of real estate, try our Endorsed Local Providers (ELP) program. We only recommend top-notch agents who help you crush your housing goals—no matter what the market is doing.
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‘The housing market is on a sugar high’: Home sales are soaring, but is it a good time to buy? Here’s what the experts say
Americans are rushing to buy homes right now. But should you be one of them?
Sales of previously-owned homes in the U.S. rose 24.7% between June and July to a seasonally-adjusted annual rate of 5.86 million, the National Association of Realtors reported Friday. Not only did the percentage increase represent a record, but the sales volume was the highest the U.S. has seen since 2006.
It’s a stunning turnaround from just a few months earlier when the coronavirus pandemic caused record-breaking decreases in sales as Americans were staying home to avoid getting sick.
To a large extent, the bumper demand for housing is an indication that Americans are aiming to make up for lost time. Many economists believe that what we’re seeing now is essentially a postponed spring home-buying season.
“The housing market is on a sugar high brought on by government stimulus and a pandemic-fueled rush to low density housing,” said Daren Blomquist, vice president of market economics at Auction.com, a real-estate website for foreclosure sales.
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“Prospective buyers will be better positioned for success as homeowners if they understand that this sugar high will not last and make sure their decision to buy is grounded in longer term factors that will affect their ability and willingness to commit to paying down a sizable amount of debt over the next 30 years,” Blomquist added.
But even with home-sales activity reaching record levels, many Americans remain unsure of whether now is the right time to make the biggest financial decision of most people’s lives. The home purchase sentiment index from Fannie Mae FNMA, decreased in July, as people’s view of home-buying conditions worsened in tandem with rising coronavirus cases across much of the country.
Here are the factors that experts say you need to consider:
Interest rates remain near all-time lows
From a financing perspective, buying a home is something of a no-brainer right now. And indeed, record-low interest rates helped spur much of the rise in home sales.
“No matter what you’re looking for, this is a great time to buy since the current low interest rates can stretch your spending power,” said Bill Banfield, executive vice president of capital markets at Quicken Loans RKT, +6.41%. “With interest rates in the two’s available, a buyer can afford much more home than they could have just a few years ago.”
While many economists expect interest rates to remain roughly this low for a while, they ly won’t get a whole lot lower. Mortgage rates have fallen in response to the pandemic and the effect it had on the economy. So if a vaccine or treatment for COVID-19 were to be discovered, rates would ly shoot upward.
“There are no guarantees,” said Tendayi Kapfidze, chief economist at LendingTree TREE, -1.60%. “So affordability could decline going forward.”
There aren’t many homes for sale
As the adage goes, you can’t buy what’s not for sale. And right now, well, there’s not much for sale across most of the country.
“Now is a great time to buy because of incredible mortgage rates, but a terrible time to buy because of inventory,” said Ralph McLaughlin, chief economist and senior vice president of analytics at financial-technology company Haus.
As McLaughlin put it, buyers are going to face a tough choice right now: Do you lock in a low rate and settle for whatever’s on the market, or do you wait for your dream home and risk a higher interest rate.
“If you plan on finding your dream home, it’s probably better to wait,” McLaughlin said. “But if you plan on trading up in a few years now isn’t a terrible time, other than low inventory, of course.”
Competition is driving faster sales and higher prices
The tight inventory of homes for sale right now is being met with a large swathe of eager buyers. And that’s a recipe for rising prices and bidding wars.
Median home list prices were up 10.1% year-over-year for the week ending Aug. 15, according to a recent report from Realtor.com. That’s the fastest growth in listing prices since January 2018. Low-interest rates allow prices to rise more quickly.
And homes are coming off the market at a rapid pace. Over two-thirds of the homes sold in July were on the market for less than a month, the National Association of Realtors reported. “That quick-decision environment may challenge some buyers, especially first-timers who are new to the process,” said Danielle Hale, chief economist at Realtor.com.
The good news is that high prices might coax some sellers into the market, said Holden Lewis, housing and mortgage expert at personal-finance website NerdWallet. More inventory on the market would keep prices and competition in check.
Falling prices aren’t necessarily something buyers should hold out for. “If prices fall significantly and inventory rises dramatically, that means the economy has taken a hard turn for the worse and you may have other priorities than housing,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Also see:Mortgage rates are going back up — just as home prices begin to skyrocket
Where you live and the lifestyle you lead are important
As any real-estate agent will tell you, all real estate is local. So what’s happening one town over or at the national level may have little bearing on what you’ll encounter in the housing market.
“Are you an owner moving from a fast-paced real estate market…to a housing market where the pace is a bit less frenzied? If yes, then this may be a good time for you,” Hale said.
For instance, if you own a home in a suburb of New York City but would to live closer to the action, say in Manhattan, now may be a great time to buy. A recent Zillow ZG, +0.
56% report threw cool water on the common wisdom that people are fleeing to the suburbs — with some exceptions.
Zillow found that in most parts of the country suburban markets have not strengthened at a disproportionately faster rate than urban markets.
But in Manhattan, home values are indeed down 4.2% from last year and properties are staying on the market longer.
Yet he biggest factor for most people in deciding whether to buy will be their lifestyle. Traditionally, most home-buying decisions revolve around milestones getting married, having kids or retiring. Millennials are growing their families and reaching their peak home-buying years. And with more people working from home, the need for more space is a factor for many would-be buyers.
If you find yourself in that position, then experts suggest not hesitating. If you have enough in savings to afford the down payment and ancillary costs of buying a home, fetch yourself a low rate and look for a home that suits your needs.
On the other hand, if you are “in between jobs or working in an industry that’s been particularly hard-hit by the recession, it may be a better time to wait,” Hale said.