Based on a Fannie Mae housing survey, buying sentiment has reached an all-time low, with 16% believing now is the right time to buy a home. However, it’s important to note that waiting could cost you. A housing shortage from now until 2030 is expected as 82.22 million millennials reach the age for buying a property.
Advantages of Buying Early
While we can’t predict how the market will look in the future, no matter how hard we try, the longer you wait, the more expensive and limited your buying search becomes. You might miss out on your dream home with limited housing units available. If that’s not enough to encourage you, consider a home a long-term investment as you build up your overall wealth in the form of equity.
Depending on your purchase price, you may be able to lock in your monthly housing payments at a fixed rate, meaning you can pay today’s prices for the next 10 to 20 years. By waiting, you increase the risk of your monthly payment skyrocketing based on the market.
Looking Towards the Future
Because it’s nearly impossible to perfectly time your move with a booming market, focus on what you can control, your personal and financial goals. Confirm your credit score meets the mark of 740 or above; this could progress you towards qualifying for a low mortgage rate, which also depends on your total debt-to-income ratio. Mortgage lenders look for applicants whose total debt-to-income ratio is steady at around 36% of pre-tax income. You’ll also want to calculate how much of your income will go towards your monthly payment; one good target is 25% or less.
Based on affordability constraints and a reluctance to sell at low prices, homebuyer demand has dwindled. Many have begun to question where home inventory will be with these shifts. Some experts may say now is the right time to buy, but only you can decide that for yourself. Avoid risky moves like draining your retirement savings or buying into an expensive debt rotation to keep the purchase.
No matter the market, once you find a house that meets your needs and you can see yourself there for five or more years, make the purchase!
What Makes Sense for You
If, after crunching the numbers and a pros and cons list, you realize the timing isn’t fit for you, determine how long you would like to sit out of the market with your trusted real estate expert at NMC Realty Group. Together, you can discuss a Cost of Waiting calculator and plan the right time to get back in the game.