If you ask the average person right now (your neighbor, your mom, your co-worker), they are likely to tell you you'd "be crazy to buy right now". I hear this often. And its not just your neighbor or co-worker - most Americans think right now is a bad time to buy a home - 79% in fact, according to a recent poll.
And for the average person in our greater Philly market, thats probably true. Rates are still incredibly high at 6%+ (in comparison to the 3's and 4's we had been seeing).
But what it you WANT to buy a home? What if you had been waiting and hoping to buy in 2021 and 2022 and it just wasn't happening? Should you sit it out?
Well I think that greatly depends on your financial picture....
- Do you have a house to sell? Will you benefit from that sale, better balancing the higher cost to purchase?
- Do you currently rent? Is that rental rate particularly high and costly based on the continually rising rental rates?
- Do you have to pull money out of lower-valued investments in order to purchase or is your cash to purchase sitting in a bank account?
- Are you looking to purchase in an area that is still seeing high levels of interest and price growth or are you flexible?
For instance, someone looking to buy their forever home on the Main Line may still be facing high rates and competition. Yet, a Philly first time homebuyer might have some flexibility if they choose an ARM loan at a lower rate, or might be able to take advantage of first-time homebuyer options, or get out of high rental rates and into a home that will likely increase in value with a plan to sell in 5-7 years.
And for those downsizers who are thinking of moving out, their homes will still likely sell, and they can move to a less-expensive condo or one of the new construction townhomes and buy investments while the market is lower.
It just depends on where you are at and what you want. Every market has perks for some buyers vs others. The good news for all buyers who do decide to buy is that while we might see a few years of stable prices and declines in certain areas, the fact is we still have a huge supply and demand issue that won't get fixed with rising rates. Builders won't be able to build as much with higher rates only furthering the supply and demand problem. Further, for residential home owners, many wont' give up their current low interest rates or recent covid-era home renovations so the average homeowner who doesn't have to sell likely won't for a few years, further hurting inventory. So if you can get in to real estate now, its still a great long-term investment (or short term in certain areas!).
Unpacking the Housing Market (30 min video)
If you subscribe to WP - 5 Reasons to Wait to Buy a Home