Dear Olivia,
I missed out on the pandemic house-buying frenzy, but now that I feel ready to buy a home, I worry that now is NOT a good time to do so. Am I wrong?
Sincerely,
Freaked Out by the Market
There is no doubt that the market is a lot different than it was a year ago. Heck, it’s a lot different than it was just a couple of months ago!
But, while things have changed, it doesn’t mean that buying a home right now is a bad idea. It just means that the experience of buying a home now is different than it was before.
For example, in March of this year, the average interest rate was just over 5.3 percent. As of this writing in mid-November, the average mortgage interest rate is 6.93 percent. Higher interest rates reduce your buying power, but other aspects of the current market might encourage you to consider buying a home.
Home Prices are Stabilizing (and Going Down in Some Cases)
One of the hallmarks of the pandemic-era real estate market was rapidly rising home values. While that’s great for homeowners, as a buyer, that meant you had to pay more for a home (perhaps a lot more) than you would have a few years ago.
The market now seems to be stabilizing a bit, though. Home prices aren’t increasing as quickly as they once were, and in some cases, they’re dropping. In our area, you might even see more sellers reducing their prices than we did a few months ago. This is good news for you as a buyer!
Days on Market is Increasing
During the height of the pandemic, houses often went under contract within a few days of going on the market. That was true of our area and across the nation. That now seems to be changing. Again, this is a good thing if you’re a buyer!
The longer a home is on the market, the more willing sellers might be to negotiate on the price. What’s more, sellers might be willing to sweeten the deal with concessions for things like new flooring, a new roof, or replacing older appliances with an acceptable offer.
Furthermore, we are likely to see a shift to more of a buyer’s market. This occurs when there’s greater inventory of homes than there is demand from buyers. This is not what we’ve experienced the last couple of years!
In a buyer’s market, you have more power at the negotiating table than a seller. As noted above, this might mean a lower price, seller concessions, or both!
There are Excellent Home Loan Programs Available
Although interest rates have rapidly changed, something that remains the same is the availability of excellent home loan programs.
If you’re a veteran, service member, or eligible spouse, it’s hard to beat the terms of a VA loan. These loans don’t require a downpayment, have limited closing costs, and don’t require private mortgage insurance.
Rural Development loans also offer excellent benefits. These loans have no downpayment and offer payment assistance, too. RD loan interest rates can be as low as one percent as well (once payment assistance is factored in).
So, is now a good time to buy a home? In many ways, yes! While rising interest rates get a lot of attention, interest rates aren’t the only factor to consider when shopping for a home.
Remember that no real estate market is perfect. If you wait for the “perfect” market conditions to buy a home, you’ll never be a homeowner. Instead, talk with your Realtor about your real estate goals, and they can help you evaluate the best strategies for attaining those goals.
As always, if you have any further questions about real estate, don’t hesitate to reach out to me at 307-856-3999!
~Olivia