Q: With all the recent news headlines reporting the current market slowdown, is now a good time to consider buying?
A: Great question! The answer depends on your specific situation. There are too many variables to name, but we’ll attempt to answer your question by identifying some of the most important ones so you can come to your own conclusion:
1) Cash Buyer: If you are paying cash or have a large down payment, such as >50%, the current market favors you. While others are stressed about interest rates, you can take advantage of discounted property values and invest in an asset that holds value better than cash during high inflationary times.
2) Down Payment Saved: If you have less than 20% saved for your down payment, then you may consider waiting. Paying purchase mortgage insurance (PMI) on top of already high interest rates may be cost prohibitive.
3) Your Current Living Situation: How comfortably can you live in your current home? If you can wait to save up more for a down payment or purchase when lower interest rates are available, it’s probably not a bad choice to hold off. If your growing family is in dire need of more space now, then you may want to buy now.
4) Marketability of Your Current Home: Selling your existing home and buying a new one in the current market environment can be easy or difficult, depending upon your neighborhood, home condition, and pricing. If your current home will be difficult to sell, then you should pump your brakes on buying now or consider renting out your current home, if your finances allow.
5) Housing Market Volatility: If you currently rent, what is the likelihood your housing costs (i.e. rent) will increase significantly over the next year? If you are due for a large rent increase and have money saved, you should consider buying now.
6) Openness to ARM’s: Many clients are open to a 5-year or 7-year adjustable rate mortgage (ARM). ARM’s typically have attractive rates that are 1.0% lower than 30-year fixed mortgages and you can plan to refinance later should rates decrease.
7) House Hack Flexibility: If you qualify for a mortgage and want to buy now, but are uncomfortable with the high mortgage payment and are open to having one or more housemates, then it’s probably a great idea to buy now and “grow into your home,” meaning you can decide not to have housemates later down the road when you need more space and have more financial resources.
There are even more variables to consider, but those above should start the conversation. We’re happy to discuss further with you based upon your situation.
Contact us anytime you have a real estate-related decision or question – quitclaim deed transfers, renovation ideas, investment property questions, etc.
We’re more than just Realtors, we’re real estate advisors.