While many homebuyers may need to find a place to live as soon as possible, others may have the luxury of waiting for the right moment. You may find yourself in this position if you're planning a move that isn't urgent, such as moving to a larger house in the same area or downsizing after your children move out.
Whatever the case, a less urgent move may mean that you're trying to time the market to determine the best buying time. Although rushing out and buying the first house you find isn't always advisable, putting too much effort into timing can also be a bad idea. This guide will answer three common questions about timing the real estate market so you can make an informed purchasing decision.
1. Should You Wait for Prices to Come Down?
There's no denying that the housing market in most of the country is fairly hot right now, with home prices hitting several historical highs. If you're a value-conscious buyer, you may think that waiting for prices to fall is the best move. Unfortunately, it's historically rare for home prices to drop significantly, although price growth may cool slightly in less intense markets.
You'll also need to consider your own home. If housing growth slows, you'll have a harder time selling your existing home and may make less money on the sale, both of which can affect your ability to purchase. In other words, it's worth considering the potential downsides of waiting for lower prices in the broader housing market.
2. How Much Do Rates Matter?
Federal funds rate increases are a normal part of the business cycle as the federal reserve attempts to fight inflation or achieve other goals. Although the federal funds rate doesn't directly affect your mortgage, it influences mortgage rates. Lenders tend to increase mortgage rates as the federal reserve increases this value.
This situation leads to a natural question: should you buy now to avoid further increases or wait for rates to drop? While this is a personal question that will depend on your budget, it's worth considering that well-qualified buyers can typically refinance. If you can afford a mortgage at a higher rate, you can refinance your loan in the future when rates come back down.
3. Is It Bad to Buy at the Top?
If you're worried about housing prices coming down, you may also be concerned about buying a home at the peak. While it's always possible for a home to lose value after purchasing it, you shouldn't view this as disastrous. Remember that housing prices rarely come down for long, so your new home is likely to regain and even exceed its previous value.
Ultimately, when to buy is a decision every buyer will need to make for themselves, but waiting is not always advantageous. If you're looking for a new home, you shouldn't let current market conditions stop you from making a purchase.
Reach out to a company like RE/MAX Great Basin Realty for more information.