If you are ready, waiting might cost you
I am going to discuss this topic with a few assumptions.
- You want to buy a home home buying guide
- You are ready to buy, meaning this is the next step
- Financially, you are ready to buy get a pre-approval
- Again, you want to by a home
My answer to that question is “what are you waiting for?”, obviously you are asking because you are concerned about either interest rates or home values, most likely both.
So, if it is interest rates that are you concern, this is where you would tell me that (insert number here) months/years ago the interest rates were (insert number here) and that is true. I could play the game and do the same and tell you what they were blank in said year and so on and try to remind you that historically, interest rates are still low yada yada yada.
Our conversation would pretty much track the same for home values. You would make an accurate statement about the increase over the last few years, and then I would point out that over time home values rise, as they do.
We are both right, but both of us being right does not help you. You want Interest rates to drop! You want home values to, maybe not drop a lot but drop a little.
Even in our deadlock, I still ask “what are you waiting for?” If you want to buy a house and can AFFORD a house, that you want, then BUY it. Not only are you purchasing and establishing a home to live in, presumably for the foreseeable future. You are also, just as importantly securing an asset.
Let’s say you purchase a home this year at X rate. What can happen after that
- The rates lower after a year or two, now you can refinance to the lower rate. You have your home and asset secured. Life is good
- The rates do not lower, but stay more or less the same for the next few years. Ok, you already have your home and asset secured. You are no longer renting. Life is good
- The rates increase over the next few years. Lucky you, you believe you bought at the right time. You have your home and asset secured. Life is good
The same can happen with the home values over the next few years. They will either go up, go down or stay the same. The difference is that even though home values can go down, historically they rise over time. And don’t forget your loan is a SELF-AMORTIZIATION loan, as time passes your principle lowers and your equity increases.
Waiting is a gamble that can hurt you. You run the risk of higher rates or higher prices and more importantly time lost. It could work out, maybe rates will lower along with values. But to be honest low inventory continues to be our problem, until we are flooded with houses to sell, I do not see values coming down anytime soon, and just like in 2020 with interest rates dropped, that could just pack the market with buyers again immediately causing prices to rise and creating another seller’s market.
Posted by Jason DeBarberie on
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