Should I Buy A Home Now? (April 2023)

However, in an interview just two months later, he stated he had sold “anything that had gone from an asset and became a liability,” believing that the long-expected recession was here. At the same time, he followed up by saying that his plan for 2023 was to reduce his liabilities and grow his assets —unfortunately, the most generic “plan” possible.

So then we arrive at the question posed by this article. Should I buy a home now? Spoiler alert: it depends.

Unlike many other forms of investments that are strongly influenced by state and national trends and shifts, real estate investments are typically hyper-local. Even though prices may plummet in one neighborhood, prices may hold strong or even climb in a nearby district. For example, if an area is seeing significant job growth and economic growth, it could attract more demand allowing sellers the luxury of picking from many offers. That being said, it’s not immune to national trends such as changes in interest rates, availability of mortgage rates, and government policies, among other factors.

So let’s look at both the current data as well as what you should consider when looking at homes in your desired location.

Volatile Mortgage Rates Continue To Impact Both Sellers & Buyers

With mortgage rates having almost doubled since August 2021, sellers are reluctant to trade a sub-3 % mortgage for a 6% one. This is likely a contributing factor that has reduced the number of listings appearing on the market during this period, a point we’ll look at further. While sellers struggle with the decision to sell on a significantly lower mortgage rate, buyers are facing a reversal of this problem. With the rapid increase of mortgage rates, thanks to the Fed’s attempts to curb inflation, the ability of Americans to afford a home was continuously eroded.

The dips in January and April leave buyers wondering if they should wait for a better deal with no one able to say where it’ll trend in a week from today. However, with long-term mortgage rates dropping for five weeks in a row, real estate investors are hopeful they will continue to fall over time. If we had to guess, we’d say it will likely begin to trend up again in the next few weeks and drop again more significantly and steadily should the economy take a downturn with the potential recession that some believe has already arrived.

Supply Continues To Be The Biggest Challenge For Home Buyers

With 22.3% fewer new listings compared to last March and a run of lower-than-expected listings since the pandemic, buyers will still have to compete for homes with resilient prices. Even though prices had shown some signs of cooling over the last few months, especially in the west, from their non-stop increases over the last few years, they have started increasing again. Celebrity real estate millionaire Barbra Corcoran believes that once mortgage rates improve, demand vs. supply will allow prices to stay strong due to scarce inventory in the market.

Buyers May Be Holding Out For A Buyers Market

With the increased mortgages dampening affordability and demand, low inventory inflating prices, and a potential recession that will further reduce demand, many investors believe that the US housing market will slowly turn into a buyer’s market by the end of 2023. With consumer confidence in the housing market at historic lows, with 79% believing it’s a bad time to buy and 40% believing it’s a bad time to sell, sellers may have to contend with a reality where demand doesn’t justify their asking prices. However, due to the current volatile nature of the market, it is impossible to predict the situation in the next few weeks, let alone the situation in a few months. You’ll want to assess your unique status when evaluating housing opportunities. 

So let’s take a quick look at the main factors you should consider when appraising whether you should invest in a home now.

3 Crucial Factors When Evaluating The Right Time To Buy A Home For You

1. Your financial situation

The single most important factor to account for is your current financial stability and ability. With the recent rounds of layoffs at some of the biggest companies in the US, you need to evaluate your current job security to consider if you can make consistent payments. If you have saved up enough to make a sizable down payment and have the financial means to meet your monthly payments comfortably, you may be in a strong position to afford a home.

2. Whether home prices are falling in your area?

Prices have been falling and rising in different parts of the country, so you’ll want to pay specific attention to the prices in the neighborhood you’re keen on investing in. If they are falling, you should hold out just a bit more, and you could score a better deal.

3. Is inventory increasing in your area?

An increase in supply can mean better prices should insufficient demand be present in your target area. Keep your eyes open for properties nearing completion as well as the number of new listings appearing in your preferred location. This can be a marker to indicate whether it’s a good time to purchase a home.

If you feel like you’ve carefully considered the current market situation and the local factors and are ready to purchase a home, talk to us first. At REI News, we specialize in finding the most affordable and suitable financing options for buyers, so speak to us today for more information.

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