What should you do right now if you are thinking about buying a home? Should you wait? Should you just go through with it now? What will the market be like in a year, five years or ten years? The truth is that no one knows and even the experts are struggling to guess what will happen next. Despite interest rates going up throughout the year, home prices have not gone down in a significant way.
Part of the reason that these home values are staying strong, despite hire interest rates, is because of the lack of available inventory. With such a low number of homes available for sale, people are forced to decide whether or not to buy now or just wait. It’s a tough decision that each person has to make for themselves based on their finances and the options that are available to them.
Challenges Home Buyers Are Dealing With
Along with higher interest rates and low inventory, buyers are also having to deal with investors and homeowners who will not budget on their asking price right now. There are properties that are still getting asking price or near it, even though they need tens of thousands of dollars in repairs. Why is that? Because investors and buyers see the property as the best option to grab and invest in for the next five years or longer. Their hope is that the values keep going up and that the $400,000 investment today can be solid for a large profit down the road.
Imagine having to pay more for something that’s not that great and one of the reasons you have to pay more for it is because someone else wants it and they have more money than you. You can start to see why this situations are creating less than ideal buying situations for those interested in buying a home for themselves.
Why You Should Still Consider Buying Now
Despite all of that, the numbers still say you should consider buying now. If you meet the requirements of an average buyer; good income, low debt, money for a downpayment and a strong credit score, there’s no reason why you should not be able to buy a home this year and be happy with your purchase.
Yes, inventory is down. However, the fact is that there are still good houses on the market and people who are looking to sell them. You need to do your homework but you can find a property that’s reasonable and the monthly costs will be affordable when you compare to renting the same type of home instead of buying it.
What If Prices Go Up?
People like to play the guessing game, especially when they look at home values. Will it go up or down in the next five to ten years? That’s a good question and no one really knows the answer. However, if prices continue to go up you will be happy that you bought now and were able to start paying off that mortgage. Not only that, but over the next five years you may be eligible for discounts and tax breaks, not only for owning the property but for fixing it up as well.
A new roof, new windows and maybe even a new pool can all increase the value of a property and take a $350,000 home in 2023 and make it worth over $500,000 by 2028, all the time you ar also paying a low monthly payment when compared to renting. If prices go up, this will be one of the smartest investments you can make and you will benefit from those increased values, especially if you want to sell in the future.
What If Prices Go Down?
For those who are concerned that prices will go down, the first thing that can be said is that you should not worry. Despite the chances of a market dip, the truth is that most expect any dip to be short-term, lasting less than a year. Also, a dip in the market of 20% may seem like a lot, but the truth is that it will only make a minimal difference when it comes to your overall property value.
If prices were to go down, you actually would benefit from that as well. For example, if you purchase your house right now and pay a mortgage rate of 7%, you could potentially refinance during or after the dip if interest rates are lower. This would reduce your monthly payments by hundreds of dollars and allow you to start saving immediately.
What Realtors Recommend To Do
Every investment needs to be taken seriously. When you look at your finances and the decision between buying a home comes down to long-term potential, you should probably move forward and buy that house. We do not know what is going to happen long-term when it comes to home prices and the real estate market. However, the fact is that there are a lot of reasons why home prices have stayed so high and they probably will not fall that much, even if they fall at all.
Your property is going to be valuable for years, especially if you plan on making upgrades throughout the next five years. Adding a pool, upgrading the roof and driveway or putting new windows in will significantly make the home more valuable and offset and decline because of the market.
As you look at the options that are available, make sure that you also discuss different neighborhoods you would like to look at with your realtor. Realtors have the ability to research different neighborhoods and see what kind of home prices there are, if properties are maintaining their value, if there’s a lot of construction and so forth. The more you know about an area, the more confident you become in buying into it, which is exactly what you are doing in this case. That’s why it makes sense to do your homework and look for places that have a lot to offer, not only right now, but in the future.