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Noel Hendrickson/Getty Images September 26, 2022 Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Buy now, or wait? That’s the question prospective homeowners are struggling to answer in today’s housing market, where home prices have skyrocketed and . Many would-be buyers are leaning toward the “wait” side of that equation. In fact, 73 percent of consumers believe it is a bad time to buy a home, according to September’s , a monthly survey gauging consumer thoughts on the real estate market. However, there are signals that the seller’s market is beginning to tilt in the opposite direction. A shows that the available housing inventory in the U.S. increased to 2.9 months of supply in mid-September — a one-month gain versus a year prior and a signal that homebuyers will have more options to consider if they’re willing to lock in a higher mortgage rate. Plus, more sellers have been as they work to attract nervous buyers. So, is it time to enter the market to ? Or is it better to wait on the sidelines in the hopes that prices or rates drop over the next year? The decision comes down to your finances. Here are some key considerations to help determine the way forward.
Should I buy a house now
If you buy now, you can immediately. That’s true no matter which way the real estate market is leaning at the time. A key point for today’s market, though, is that buying now means avoiding additional mortgage-rate increases later. They’re likely on the way, too, as the . “If a buyer finds a property they would like to call home, they should not delay,” says Stacey Froelich, a broker with Compass in New York City. “You cannot time the market, and a home should be a long-term investment. A year from now, even if prices come down slightly, will most likely be higher. In the end, that will cost a buyer more monthly if they are financing.” Rising rates can spell serious trouble for your monthly budget. Bankrate’s can help you give you a sense of what a higher rate will mean for your payments. On a $450,000 30-year loan with a 5.5 percent interest rate, the monthly payment is just over $2,555. If that rate jumps to 6.5 percent, the payment leaps to more than $2,844. Plus, you’ll wind up paying a lot more in interest over the life of the loan. In general, if you can answer yes to these three questions, now is the time to buy. 1 Do you have excellent credit
Anytime you’re borrowing money, start by reviewing your credit report and your . The best deals on mortgages will be available to those with credit scores of 740 and above. If you have demonstrated that you are a low-risk borrower with a history of on-time payments, you’ll be in line for the lowest mortgage rates that a lender offers. 2 Have you saved enough for a down payment
In addition to paying your bills on time, have you managed to save a fair amount of money, too? If you are sitting on a sizable portion of cash that can make a big dent in your , now is a good time to buy. Make sure that you’ll have plenty left over, though. Lenders feel more comfortable loaning you money if you have additional that can provide a cushion if something unexpected happens. 3 Are you planning to stay in the home for a while
In addition to the purchase price, buying a home comes with that can run between 2 and 6 percent of the property’s price. So, to justify those one-time transaction costs, it’s wise to be reasonably certain that you won’t move again anytime soon — or that you’ll be financially stable enough to hold on to the property and rent it out.
Should I wait for prices to come down to buy a home
If you want to become a homeowner but are waiting for prices to cool off, here’s the challenge: Housing prices don’t tend to decrease by a sizable amount (with the notable exception of the of 2008). However, the good news is that housing prices also cannot skyrocket forever. Here are two instances in which it might make more sense to wait out the market: 1 If inventory in your area is on the rise
If there is no shortage of homes for sale in the market where you’re looking, waiting may save you some money. “It is likely that prices will level off or slightly decrease now that interest rates are rising,” Froelich says. But waiting can be a losing game in places where housing is severely limited. “However, that’s only if inventory increases,” Froelich continues. “Inventory is [still very] low, and without an increase in supply, it is hard to see how prices will decrease.” Heather Brown, an agent with RE/MAX Austin Skyline in Texas agrees: “We just don’t have enough houses. Buyers on tight budgets who wait will eventually be priced out of the Austin market.” 2 If your personal finances are less than stellar
The biggest reason to wait is if your current financial situation is not ideal. For example, if you are expecting a sizable commission check, an inheritance or some other windfall that would make a big difference in your down payment, waiting until it arrives makes sense. And if your credit score needs some love, waiting is also smart. Take some time to pay off your credit cards and improve your credit so you qualify for better loan terms.
Examine your local market carefully
Deciding whether you should buy a house now or wait ultimately comes down to where you want to call home. Regardless of national headlines, real estate is hyper-localized and can vary greatly from one market to another. Consider this data from Redfin: In , a suburb of Chicago, the median sale price of a home has increased by just 2 percent in the past year, and the typical home sits on the market for 48 days. But in , home prices have increased by more than 8 percent in the past year, and the typical home sits on the market for just 16 days. Work with an expert agent
In today’s market, it’s more important than ever to who can help you successfully navigate the process. “The right broker will be privy to what inventory might be coming to market or a particular situation with a seller or building,” says Rachel Glazer, a broker with Compass in New York City, says. Bottom line
Trying to buy a house right now can feel overwhelming, but waiting too long can present challenges as well. Review your finances in detail, and take the pulse of the town in which you’re hoping to live. Then, talk with an experienced local real estate agent to figure out if you should buy now or hang tight until the market is a bit more friendly to your bank account. SHARE: Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles