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5 Top Reasons Why It's Still A Good Time To Buy A House

One of the top reasons why it's still a good time to buy a house is the favorable interest rates, offering prospective buyers the opportunity to secure a mortgage with more affordable terms. Additionally, the growing demand for housing, coupled with limited inventory, underscores the continued strength of the housing market, making it a compelling moment for those considering stepping onto the property ladder.

5 Top Reasons Why It's Still A Good Time To Buy A House

Morgan Barrons

Feb 21, 2024

Understandably, arecord numberof Americans believe now is not the right moment to purchase a home, given that housing costs are almost at an all-time high. The average US home's sales price has increased by around 40%in the last four years to $394,300, while mortgage rates are at their highest point in decades.

This is a very challenging moment for a lot of prospective homebuyers to enter the real estate market. However, specialists think it's opportune for some people. For those who are prepared to stick with it, there is significantly less competition (and a lot more negotiating power) because so many individuals have been scared out of the market.

Even though it's not for everyone to navigate the current housing market, buyers with good credit and sufficient funds to make a sizable down payment can mitigate some of the negative effects of high interest rates by using a well-padded savings account until they can refinance at some point.

In case you're committed and prepared financially to purchase a home at this time, the followingtop reasons why it's still a good time to buy a housemay work to your advantage.

1. Qualified Buyers Can Keep Interest Rates At Bay

Person Giving a House Key
Person Giving a House Key

All-cash purchasers have two significant advantages when mortgage rates are high: they gain the benefits of reduced competition while avoiding the burden of big interest payments.

Both of these advantages are very advantageous. According to Redfin, this is the reason why more than a third of all home transactions were made by buyers who paid for the property with cash in September, which is the highest level since 2014.

Homebuyers who have strong credit ratings and sufficient funds on hand to make significant down payments also have an advantage, albeit to a lesser degree than those who do not have credit scores. These purchasers are eligible for more favorable interest rates from mortgage lenders, and the size of their loan can be reduced by making a substantial down payment.

2. Home Values Are Rising

According to the most recent Existing Home Salesreport published by the National Association of REALTORS, the current real estate market is characterized by a significant disparity between the number of home buyers and the number of home sellers.

Approximately 19,600 properties are currently available for purchase in each state.

The majority of homes are sold within a month. Residential properties with a price range of $100,000 to $250,000 are typically sold within 19 days.

Additionally, the analysis demonstrates that if sales continue at their current rate, every home that is listed on a Multiple Listing Service will be purchased in 3.2 months.

Assuming that a market that is in equilibrium has a supply of homes that is equal to six months' worth, the data on home sales indicates that we are currently in the zone of the Seller Market.

There are a lot of people who are interested in purchasing a property right now, but there aren't many people who are interested in selling. Because the real estate market is currently so out of balance, the price that you get today might be the best price that you can get on something.

3. You Can Buy A House Now, Then Refinance Later

Mortgage rates that are higher than seven percent may appear to be a significant financial burden every month; nevertheless, borrowers should be aware that they are not necessarily obligated to continue paying this rate for the rest of their lives.

A strategy that some people refer to as "Date the rate, marry the house" allows homeowners to refinance their home loan at a lower rate after they have purchased their home, provided that interest rates have decreased. One way to put it is that a high rate might be nothing more than a temporary nuisance. On the other hand, a home can last forever.

Real estate professionals can look at other macroeconomic variables and make some educated assumptions about what the future holds for mortgage rates, even though no one can forecast what the future holds for mortgage rates.

Men in Dress Shirt In Front of a House
Men in Dress Shirt In Front of a House

4. Home Sellers Are More Motivated To Close

The fall and winter months are traditionally quiet for the real estate market. This is because it is difficult for families to relocate during the school year, and people are less likely to move during the holidays or when the weather is terrible.

Consequently, this indicates that the majority of the properties that are put up for sale during this time of year are being sold by those who need selling, rather than by individuals who are interested in testing the market. You might be able to negotiate the terms.

There is a good probability that the house you end up falling in love with will receive many bids to purchase during the spring when more buyers are hunting for homes. It is much less probable that you will find a wonderful home at this time.

In a market that is experiencing a slowdown, buyers may also attempt to obtain rate buydowns. This is a situation in which the seller pays to essentially lower the mortgage rate for a few years.

A house buyer with a 7% interest rate would pay 5% for the first year of the loan and 6% for the second year of the loan if they were to take advantage of a 2-1 rate buydown, which is one of the most typical types of these concessions.

5. Next Year Could Be Even Worse

Homebuyers may face challenges in the form of high mortgage rates well into the new year or even further into the future. Even though the Federal Reserve is still concentrating on bringing inflation under control, the institution has stated that it is not even considering lowering interest rates at this time.

Additionally, there is a lack of clarity on the future trajectory of home prices, and housing analysts working for a real estate agency are predicting that even higher prices are on the horizon as a result of the scarcity of available homes.

The fact of the matter is that nobody knows what will happen in the future, and the age-old recommendation that purchasing a home is a wise investment is still valid, especially for those individuals who can afford it comfortably.

Person Holding Silver Key
Person Holding Silver Key

What Advantage Does Buying A House Offer Over Renting?

Purchasing a home has various benefits versus renting. One big benefit is that, unlike renting, which offers no chance for equity growth, buying a home is an investment in an asset that usually increases over time.

More control over the property, including the option to upgrade and modify it to your tastes, is another benefit of homeownership. In addition, fixed-rate mortgages provide monthly housing cost stability whereas rent is subject to annual fluctuations.

Finally, there are possible financial advantages to home ownership, such as the ability to write off property taxes and mortgage interest, which can save a lot of money when compared to renting.

Is Now The Right Time For You To Invest In A Home?

Ultimately, you decide to determine when the timing is right for you to become a homeowner. Personal readiness, of course, means different things to different people, but generally speaking, it refers to having good credit and being in control of your debt.

You should also have an emergency fund set aside, be able to comfortably make your mortgage payments, and have enough savings for a down payment. Get pre-approved for a mortgage now if you fit these basic requirements, and you may start looking for your ideal house.

Inquiries To Make When Purchasing A House

After talking about when it's ideal to buy a house, let's talk about additional factors to take into account before starting the real estate transaction. It takes more than just touring a property and falling in love with it to choose the ideal house.

Throughout the transaction, there should be open communication between the buyers and sellers, and agents should be able to locate the answers to any queries that may arise. When purchasing a home, buyers, and sellers should consider the following crucial questions, among others;

  • What is my entire spending limit?
  • Why is the seller listing the house?
  • What will the sale entail in its entirety?
  • How much is the home's estimated worth?
  • Will there need to be any updates or renovations?
  • For what duration was the residence listed for sale?
  • How much are the surrounding properties selling for?
  • How is the surrounding area doing?
  • How much will closing costs be anticipated to be paid?

Frequently Asked Questions

What's A Driving Factor Behind The Current Buyer's Market?

Low inventory levels create competition among buyers, potentially leading to better deals.

How Does Buying A House Align With Lifestyle Goals?

Personalization and the ability to create a permanent living space cater to individual aspirations.

How Does Buying A House Now Offer A Sense Of Security?

Renting exposes individuals to rising rents, while homeownership provides price predictability.

Final Thoughts

Talking about the top reasons why it's still a good time to buy a house, for those who are financially prepared, several reasons make this a good time to buy a home, even despite the obstacles presented by high housing costs and mortgage rates.

More negotiating leverage is possible due to less market competition, and qualified purchasers can take advantage of advantageous financing rates and possible equity expansion.

There are chances to find desirable houses because of the rising value of homes and the motivated sellers. Furthermore, there is flexibility in refinancing later on, and it is advisable to act sooner rather than later due to uncertain market conditions.

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