Should you buy a house?
Interest rates, real estate, and the economy in general are taking a wild ride this summer.
In an attempt to curb a 9%+ inflation rate, the Fed started raising interest rates in March and in mid-June hiked the benchmark rate three-quarters of a point.
A few days ago on July 27th, they raised it again another three-quarters of a point. Home prices nationwide rose 20% from April 2021 to April 2022 according to the S&P Core Logic Case-Shiller Index.
GDP reports for 2022 quarter-one and quarter-two don’t look so good, so economists are talkinng about recession.
So if you want to buy what does that mean for you?
Should you wait?
Should you jump in?
Things to think about if you want to buy:
There is some indication that prices are dropping, at least a little.
Because of higher interest rates, some buyers no longer qualify for a mortgage.
Sellers may be forced to drop prices to sell their homes. I see more listings every day with price reductions that have also been on the market for a longer amount of time. Check out the graphic from AEI Housing Center.
There are more houses on the market, giving buyers more choice.
Realtor.com predicts a 15% rise in inventory over the next year. And again, higher interest rates may mean that there are fewer buyers which translates into less competition, fewer bidding wars, and fewer over-asking-price offers. Here are the detailed stats for those of you who love the numbers.
Do you need to move?
Give yourself a couple of months in this market for the house hunting process since the inventory is still on the low side.
Are you confident that your job is secure?
If we are facing a recession, is your line of work something that might be affected?
If you’re still unsure about going house hunting right now, use this time to get ready.
Talk to a mortgage professional and get pre-qualified now. Look at your credit report to see if you can clean it up. Budget, plan, and save money. The more cash you have when you start the house hunting process the better.
Even if you’re not ready to buy right now, talk to me about your future home wish list. I set up your search for you to begin to see the market in areas where you’d like to live.
Be patient.
30-year mortgage rates are around 5% which is still historically low. Keep in mind that higher rates will hopefully balance out with lower prices.
