It’s been the year for contradictions in the housing market. Housing sales are decelerating, home builders are slowing down production and mortgage interest rates are more than double what they were a year ago. Mortgage applications are at their lowest level in 22 years. However, home prices remain near record highs, driven by low supplies, household formations by Millennial and Gen-Z homebuyers, and a strong job market. Is now the time to buy, or should you wait for housing prices and rates to come down?
Timing the housing market is seldom a good idea, especially during market volatility. Only you know if the time is right for you to become a homeowner, but if you’re uncertain, consider the following:
1. Even if home prices fall, they won’t do so everywhere. Prices in areas with plentiful jobs may go flat for a while, but they won’t fall significantly.
2. Efforts to curb inflation will eventually result in lower mortgage interest rates.
3. Buying a home is a long-term investment and a hedge against inflation. Buy when you plan to stay in the home for several years or longer, allowing you time to build equity and recover your closing costs.
4. Buy when it’s affordable and the right lifestyle choice, even if you have to choose a smaller home or a lesser neighborhood.
5. The smartest investors don’t wait for the bottom to buy, because there’s no predicting when that will be, if ever. Waiting could price you out of the market.