TLDR: No. The worst time to buy a house is when you can't afford one. Markets are cyclical, but when you can afford to buy the rest is noise.
When I purchased my first home in late 2020, I thought I had waited too long to enter the real estate market, and bought at the COVID housing peak, and it was all going to be downhill from there. Fast forward to today, after a cosmetic renovation and 3 years of appreciation, my first home is worth 30% MORE than when I bought it. I also turned it into a rental property, so instead of paying to own it it pays me monthly.
Buying a home or investment property is about your finances and your goals. Every market will have variables working for you and against you. Understanding those variables and leveraging them to your advantage is the key to finding a deal in any market.
There is no doubt that our current market has challenges, as every other market has, and future markets will also have. There are many variables to purchasing real estate, the chances of you timing the perfect market with low interest rates, low house prices, high inventory, and low competition defies the logic of economics.
Read on for the current market challenges and opportunities to help inform if now is a good time for you to buy:
Interest Rates:
The historically low mortgage rates of 2020-2022 have stagnated the market as now consumers who either purchased or refinanced into a 3% or below rate are unwilling to move, and the current average interest rate of 7-8% is giving buyers sticker shock. This week we did see interest rates drop and many are looking for rates to drop significantly in 2024 as it is an election year.
Affordability:
With the low interest rates of the past few years, home prices rose quickly to balance the increased demand. House prices have not re-adjusted back down to match the now higher rates and lower demand.
Supply and Demand Dynamics:
Now here is where things start looking up for our buyers, with the higher interest rates and home prices, there is now much less competition for available homes. Which means buyers have more leverage to negotiate the price of homes down, ask for an inspection contingency or seller credits.
Economic Uncertainty:
Financial experts have been warning of a looming recession that has yet to actualize, combined with wars overseas and stubborn inflation, many are feeling that the uncertainty of the current moment does not allow for purchasing a home.
Much like investing in the stock market, timing the market perfectly is nearly impossible. There will never be a completely risk-free time to purchase a home, so it is crucial to understand the total cost of home ownership (mortgage, taxes, insurance, maintenance, renovations, etc.) and your entire financial picture before purchasing. Purchase something you can afford for the foreseeable future and add in a buffer to help mitigate home price fluctuations and any lifestyle changes that may cause you to need to sell at a less-than-ideal time.
xx,
Claire
