One of the most common dilemmas that home buyers face is deciding when to buy a home. Is it better to buy now? Or is it better to wait? Whether prices are on the rise or are falling, buyers seem to face the same dilemma in making a decision. If you are in this boat, here are a few things that may help you decide on the best time to buy.
Interest rate trends
Interest rates directly impact how much a home will cost you, or more importantly, how much of a home you can afford. When rates rise, the same priced house will naturally cost you more to finance. Therefore, monitoring the direction that interest rates are expected to go is extremely important.
During 2017, rates have already risen. Given that the economy has bounced back from its previous lows, the Fed is no longer freezing rates. Many experts believe that rates will continue to rise as the year progresses. Under these conditions, it’s more beneficial to buy a home now that to wait for later this year or next year, when rates may be much higher.
Home price trends
Another important trend to follow are home prices. Have prices been rising or falling lately in your community. More likely than not, it’s been rising. This is very important for two reasons.
First, if prices are rising, the longer you wait, the more expensive homes will be. This means that you will spend more money on a home or you will qualify for a less expensive home as time goes on. There is no benefit to waiting unless you think home prices will start falling.
Secondly, if prices are on the rise, buying now allows you to quickly build equity in your home. Equity is one of the major benefits of home ownership to begin with. If you could build the same amount of equity in one year that it may otherwise take five years to build, then you’ve already profited greatly from your investment.
Cash flow and investment
Another important consideration when it comes to buying a home is the cost of not buying a home. If you are renting, how much are you spending each month or year? How does that compare to home ownership? Let’s assume that each option costs you the same on the surface. Now consider the additional advantages of owning, such as tax benefits and equity building. How does the overall cost/savings of renting compare to buying when you look at the big picture?
Under the current market conditions, it’s simply better to buy now than to wait.