No one wants to buy at the top of the market, but it’s not clear whether the market has peaked—or if record-high home prices and fast-rising mortgage interest rates will continue ratcheting up even higher. Is this the right time to buy a house or should you put the search on hold?
Should You Pause Your Search?
The number of sellers forced to cut prices on their properties doubled in June compared to the same month a year ago, and there is less competition from buyers. As a result, fewer buyers are able to qualify for mortgages. Others worry about high prices and the prospect of another recession dropping out of the market, which means fewer bidding wars. Buyers don’t have to offer so much over the asking price—and might even be able to get a home for less than the asking price. They don’t need to waive as many contingencies as well.
That being said, It’s likely that those who wait until the fall or next spring are likely to encounter even more homes for sale, additional price cuts, and an increasingly buyer-friendly market. Waiting may also help with dealing with the terrible combo of high prices and rates that has pushed homeownership out of financial reach for many younger or less well-off buyers, which would require them to dangerously stretch their budgets.
Should You Continue Your Search?
Some real estate experts are predicting that home prices will just continue to rise. We know there are still far more investors and people out there who would like to become homeowners than there are properties available for them. Mortgage rates are another unknown. Mounting recession fears could keep them in check. When the Fed’s rates rise, mortgage rates typically follow suit. The continuation of rates moving higher would make homeownership even more expensive than it is today.
If you see indications that home prices and mortgage rates are continuing to sky rocket, you may need to act now. Those factors may price many aspiring homeowners, especially those who don’t have the proceeds from the sale of a previous home to help finance the next purchase, right out of the market. Or first-time and other buyers might have to look at cheaper homes, such as fixer-uppers and smaller properties without all of the features they had hoped for in less desirable locations.
It’s best to be vigilant about what’s happening in the housing market, as well as the broader economy. Look for clues on where it all might be heading. And don’t be afraid to negotiate with home sellers as well as mortgage lenders.
If rates fall one day, be ready to pounce immediately. Shop around for the best rates, consider paying points, which lower rates, and be prepared to haggle. You want to lock in the lowest rate you can find, yet maintain some flexibility so that if they fall even further, your lender will honor the lower rate.Questions? Contact The Elite Team Today!