Is Now a Good Time to Buy a House?

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Is This The Time To Buy A House

Is Now A Good Time To Buy A House?

When is it a good time to buy a house? People ask us that question often. A lot of people have trouble deciding when to buy because the market is always changing.

America is rebounding nicely from the housing crash of late 2007 and 2008. A lot of this has to do with the fact that laws have been put in place to help it recover.

In this article, we’re going to discuss if now is a good time to buy a house. Our goal is to educate you a little bit about the market, go over what your options are, and leave you with enough information to make your home buying decision.

So, read along with us. There’s a lot of information to learn. By the end, we hope that buying a house doesn’t appear as overwhelming as you originally thought.

Understanding the Housing Market

The housing market is a fascinating part of the American economy. Understanding it could be an entire article in itself. But, we’re not here to overwhelm you with a bunch of facts, figures, or technical terms.

You just need a high-level understanding of how the housing market works to help you decide when it’s a good time to buy a house.

When most people purchase a home, they are looking to get a loan. As a result, your main concern in the housing market is going to be interest rates. That’s going to tell you how far your money can go when you buy a new home.

If interest rates are low, your money stretches further. This means you can get a better house for your money than you would during times of high interest rates.

Therefore, it makes sense to buy a house when interest rates are low. But, more factors dictate a strong housing market.

Why Is Now a Good Time to Buy a House?

So, why is now a good time to buy a house? We’re hearing all over the news and TV that now is the best time to buy in recent history. Well, we already covered one of the reasons: interest rates.

Let’s dive a little deeper into the interest rate trend, as well as some of the other factors that could make 2021 a great time to buy.

Remote Work Is Increasing

The COVID-19 pandemic has made working from home the norm these days. Everyone’s homes now double as a place for the family, as well as an office. As a result, people may be looking to upgrade the size of their house.

People are also looking to relocate because of remote work. Many companies have seen incredible benefits from the remote work model. Large corporations are shutting down office locations in record numbers since the pandemic.

Proximity to your office or job is a huge determining factor in buying a home. But, if homeowners don’t have to live in or near expensive cities for their jobs anymore, they may choose to relocate.

People whose work environment has changed may want to change their home environment, as well.

The Economy Is Staying Strong

Housing prices will always change a little bit. We’ve seen ups and downs in the trend of housing prices over the past year. But, it seems like the housing laws and economic recovery plans put in place over the last decade will continue to strengthen the housing market.

Although housing prices are high and inventory is low, it seems like potential home buyers will continue to buy. The challenge is that the high prices are putting homes out of reach for some buyers. This is particularly true in the case of first-time homebuyers.

If you’re looking for lower prices to fit your budget and less competition, you may want to put off buying a home for a little while.

Low Mortgage Rates

Earlier, we touched on how mortgage rates work in the overall picture of the housing market. Now, let’s take a look at the current mortgage picture.

Mortgage rates are at the lowest they’ve ever been. For most of 2021, the interest rate for a 30-year, fixed-rate mortgage has been under 3%. Most Americans haven’t seen interest rates that low in their lifetimes.

In fact, the “baby boomer” generation saw mortgage rates as high as 18-20% in the late 1970s and 1980s.

The reason mortgage rates are low has to do with the COVID-19 pandemic. The pandemic has made for very uncertain times in the U.S. During these uncertain times, the government has stepped in to help “prop up” the economy.

Federal funds have put rate cuts in place to make sure the economy stays strong.

Since mortgage rates are so low, many experts and potential homeowners are thinking it’s the time to buy. It could be. Experts are also predicting rates to increase in the coming months.

It may make sense for buyers to “get while the getting’s good” but buying a house is a big purchase. And, like with any big purchase, there are multiple things to consider before pulling the trigger.

A Few Reasons Why You May Want to Wait

When you’re making a big decision like buying a house, it helps to look at things from all angles. Interest rates have been low for a long time and the economy has been strong. But there is always another side to the story.

Here’s a look at some things to consider before pulling the trigger on your home buying decision.

Other Effects of COVID-19

We talked about how the pandemic has increased remote work. We also discussed the effect that the increase in remote work has had on the housing market. But, the COVID-19 pandemic has also had some negative effects on homebuying.

One major change we’re seeing since the pandemic is the way people are buying homes. Real estate agents are showing homes virtually now. Some agents do this by walking through a vacant house with their buyers on FaceTime or a Zoom call.

Other agents may send their buyers 3D layouts of the home, drone footage, and walkthrough videos.

While the advancement in technology is great, it’s hard for most people to make a decision to buy a home without seeing it in person. Some sellers are still willing to show their homes in person. But, because of the pandemic, other homeowners may not be willing to do so.

Changing Appraisals and Closings

Appraisals and closing appointments have also gone virtual since COVID-19. Some attorneys or title companies are doing closings via Zoom or other teleconferencing platforms.

Appraisals are changing in the same way. Home appraisers are no longer doing walkthrough appraisals. Lately, the value of houses has been determined by a drive-by or virtual appraisal. This can make the home-buying process a challenge.

An appraisal is an important step in determining the value of the house. The value determined by the appraiser also plays an important part in the terms of your mortgage. If an appraiser isn’t able to walk through a property, they may miss something important.

The resulting appraisal value could be skewed. This might work in your favor but it could also work against you when you’re going through the mortgage application process.

During COVD-19 times, we’ve learned that a lot can be accomplished virtually. But virtual appraisals and closings throw a few more wrinkles into the process of purchasing your home.

It’s a Seller’s Market

With inventory, so low and demand so high, sellers have the upper hand in the current market. This means current homeowners can wait until they get the right price.

If they don’t like a particular offer, they can just decline it and wait. Most houses are receiving multiple offers within days of being listed, so the seller knows that a better offer will come along most likely.

When it’s a seller’s market, that means tough times for home buyers. The increased competition will force prices higher. And, despite prices being high, houses don’t last long on the market.

If you’re considering buying a home, you need to get serious about your shopping. Work with a lender and have a pre-qualification letter ready. That way both your agent and the seller know you’re serious.

When you see a home you like, don’t be afraid to put in an offer. Obviously, be sure that you like it first but don’t be afraid to move quickly. If you hesitate on a house that you like, chances are it may be gone.

You can also entice sellers to take your offer over others that are on the table. You can do this by offering a larger down payment or paying cash for your home.

Buy When You’re Ready

Ultimately, it’s a good time to buy a house whenever you’re ready. Every point in the market has its pros and cons to buying. You need to make sure you’re ready emotionally and financially before moving forward with a big purchase like owning your own home.

When it comes to the financial part, RealFi has got you covered. Contact us today and we can work with you on your home loan options. If you have any questions, our friendly and knowledgeable staff is more than happy to help.