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You may want to own a home. But is now the right time to buy? Read on to find out.
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Owning a home has numerous benefits. For one thing, you get to build equity in a place of your own. You also get to set your own rules, as opposed to having to follow a landlord’s directives.
Want a giant dog who sheds all over the place? That’s your call. Want bright blue shutters you can see from a block away? Unless you’re buying a home in an HOA that prohibits them, that’s your choice to make.
But while homeownership has its perks, it’s important to buy a home at the right time. Interestingly enough, a good 39% of respondents from TD Bank’s First-Time Homebuyer Pulse think now is a good time to buy a home. But here’s why they may be mistaken.
Low inventory is still a challenge
As of the end of April, there was only a 2.9-month supply of homes on the market, according to the National Association of Realtors. Normally, it can take a good 6-month supply of homes for there to be enough inventory to meet buyer demand.
A lack of housing inventory could mean that it becomes a struggle to find a home that meets your needs. And it could mean losing out on negotiating power.
When real estate inventory is sparse, sellers know they have the upper hand. That gives them the leeway to command higher prices for their homes and refuse to accept a lower offer. It also allows sellers to get away with making fewer repairs prior to listing their homes, leaving you, as a buyer, stuck with a property that isn’t in the best shape.
Higher mortgage rates could be a problem
Although home prices have come down a bit this year compared to last due to diminishing buyer demand, any savings you might enjoy there is apt to be offset by higher mortgage rates. Even if you come in as a borrower with outstanding credit, you may find that it costs more money than you bargained for to sign a mortgage loan. And the last thing you want is to buy a home that’s a financial stretch for you right from the start.
You may not want to buy a home this year
Although almost 40% of first-time home buyers are convinced that housing market conditions are pretty favorable right now, the reality is that 2023 is generally not a great time to buy a home. That doesn’t mean that buying is the wrong decision for you. But for the typical buyer, waiting could pay off.
If housing inventory opens up in 2024, homes might get less expensive. Even if mortgage rates don’t drop next year, buyers might still get relief in the form of lower prices.
Of course, if you’ve been saving to buy a home for years and you’re frustrated with renting, then by all means, buy a home this year if you can find one that’s truly affordable for you. But if you end up waiting, don’t assume you’ve missed out on a prime opportunity. If anything, waiting could open the door to an even better opportunity in the coming year.
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