Is Now A Good Time To Buy A Home?
December 20, 2022
Is Now a Good Time to Buy a New Home?
The short answer is, yes, so long as you have found the home of your dreams and can afford the mortgage payment. The long answer is that it depends on your current needs.
Since interest rates will affect your monthly payment, there are always financial implications to consider for anyone purchasing a new home. Unfortunately for homebuyers, higher mortgage rates mean higher monthly payments. However, the increase in loan costs also affects the overall affordability and availability of homes for sale.
The cost of homeownership has doubled over the past six months leaving many buyers with more than just location to weigh into their home buying decision. This rapid increase in cost has been driven by the central bank’s reactionary monetary policies because of the pandemic.
The Federal Reserve, or “the Fed”, uses fed fund rates as the primary tool to influence the U.S. economy through the Federal Reserve Banks. In their efforts to help manage inflation and steer our economic outlook away from a recession, interest rates were kept at a near-zero range during the pandemic while they pumped trillions and trillions and trillions of dollars into the system to prop up the economy. Then, in an effort to stave off hyper-inflation, the Fed started raising rates sharply in 2022 causing the cost of credit for everything from goods and services, to homes and automobiles to become much more expensive.
But despite how it may seem, this also has positive benefits for homebuyers.
More Choices and Lower Prices
If you’ve been shopping for a home, you’ve likely heard stories about how crazy the housing market had been earlier this year. When mortgage interest rates dropped to an all-time low, the demand for buying a new home went up and the supply of houses for sale started to drop. This natural short supply and high demand scenario caused home prices to soar to record levels never seen before. Real estate agents even had to recommend that homebuyers offer more than the seller’s asking price just to make an offer more competitive during the bidding wars.
The good news for a home buyer in today’s market is the rising interest rate has helped to rectify the issue by reducing the number of buyers who can qualify for a mortgage loan. By pricing some buyers out of the market, the decline in demand means the inventory of available homes will be going up and the price you have to pay for a home will be much more competitive as the housing market reverts back to its natural equilibrium.
While homes are still expected to sell relatively quickly, additional listings that spend more days on the market is a great sign for qualified homebuyers. This means we’re returning to a somewhat “normal” market, although no one can quite define what “normal” actually means.
Again, we remind buyers that it’s not about what the market is doing. You buy a home because it’s where you want to build your life and dreams for your family; and you buy because you can afford the mortgage payment.
How to Buy Your Dream Home
It’s simple – you do it just like you did before the housing market went crazy. You find a real estate agent that you trust to help you shop for your dream home and a mortgage broker that you trust to find you the most competitive loan. As for the changes the Fed may make in raising or lowering interest rates, your mortgage broker can keep you informed as to when will be the best time for you to refinance if you end up buying your dream home when rates are high.
When buying a home, there are real-world factors for any homebuyer to consider. Listed below are a few of the key things to keep in mind when shopping for your dream home:
- Location: Consider the neighborhood and proximity to schools, public transportation, and other amenities.
- Size and layout: Think about the size of the home and the layout of the rooms to ensure it meets your needs and accommodates your lifestyle.
- Condition: Be sure to thoroughly inspect the property to ensure it is in good condition and identify any potential issues that may need to be addressed.
- Cost: Consider your budget and be sure to factor in additional costs such as closing costs, property taxes, and homeowners insurance.
- Future plans: Think about your future plans, such as starting a family or retiring, and consider how the home will fit into those plans.
- Resale value: It's always a good idea to consider the potential resale value of a home in case you decide to sell it in the future.
Overall, it's important to carefully evaluate all of these to ensure that the home you buy is the right fit for you and/or your family. To continue the homebuying process, visit the Bee media page to watch our helpful Mortgage Videos.
So, should I buy a new home now?
If you are a qualified buyer, yes. There’s no doubt that the housing market was in need of a correction but stabilizing the buying frenzy does not suggest a housing market crash. In fact, there are already signs that inflation is starting to cool off and the housing market is returning to normal. Generally speaking, if you are looking to buy a home in the next year, it may be advisable to lock in today’s interest rate using the Bee Advantage.
From shopping for a loan to closing on your mortgage, Bee will be there with you every step of the way to ensure you stay up to date with everything going on. To begin your home-buying journey, visit the App Store or Google Play to download the Bee app. Our buying power calculator is FREE to use and doesn’t require a credit check for you to estimate monthly payments and personalize a mortgage to fit your budget. From fixed to adjustable rate loans, Bee has a mortgage that will work for you with shorter or longer terms for repayment.