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Should I Buy a New Home Now or Should I Wait?

July 19, 2023 By: Great Midwest Bank
A young couple sits on a couch looking at a laptop and paperwork on the coffee table in front of them.

Real estate agents will tell you that one of the most common questions they get is, “Is now a good time to buy a home?”.

Usually, the answer is not a simple yes or no. The housing market is nuanced and exciting, but oftentimes plain old confusing, too. There are also lots of financial and personal considerations to mull over. Buying a home is a big decision!

Every journey toward buying a new home is a little different, and you will want to weigh a few factors to make the best choice for your needs. Here are some things to think about to help guide your decision on when to buy.

Housing Prices and Interest Rates

When people wonder if they should buy a home now or wait, a lot of times they want to know if it’s a “buyer’s market.” That is, Are buyers getting good deals on their houses right now?

There typically is not a cut-and-dry answer to that, and there’s more to consider than just the price tags of homes in your area.

How Housing Prices and Interest Rates Relate to One Another

One common pitfall of prospective homebuyers is to focus too much on housing prices when deciding whether to buy now or later. To get a better idea of your local home-buying climate, take a look at both home prices and interest rates.

Home prices in your area and Home Mortgage Loan interest rates tend to have an inverse relationship. If interest rates are lower, average home prices are typically higher.

We saw this around the start of the pandemic when the supply of houses for sale was low. Interest rates dropped to a historic low and home prices saw a rise due to the low supply and high demand. The low rates were terrific for buyers, but they also had to navigate a competitive market and much higher home prices than the local market had seen in years.

On the flip side, when interest rates are high, home prices are often lower. After the pandemic, the housing market opened up more and home prices went down a bit on average. Interest rates also rose back up, as The Federal Reserve tried to cool a rapidly inflating economy. That means that while buyers may be spending less on their house, a bigger chunk of their monthly payments is going to interest.

If home prices or interest rates aren’t ideal, should I wait to buy?

While we cannot tell you definitively whether to buy a home now or wait, we will say this: it is unlikely that the market will ever be ideal in every way, when you’re thinking of buying a house. That is to say, waiting indefinitely to buy may not yield the results you’re hoping for. There is no knowing precisely how the market will look months or years in the future.

While interest rates will likely come down sometime in the future, there are many factors that impact local housing inventory and demand, including the local economy and local government regulations. Trust us—if we knew how to predict those things many years into the future, we’d tell you!

Instead, when you feel like you’re ready to buy a new house, consider weighing your options and what makes sense for your particular needs and financial situation. Perhaps you’ve found an amazing house that fits your budget but rates are higher than you’d like. You might decide to buy the house now and look for opportunities to refinance in the future.

Exploring Your Local Market

What does the housing market look like in the area you’re looking to move to? Beyond housing prices and interest rates, you should think about what you want overall.

Housing Options and Needs

Before you take the plunge into deciding to find a new home, make sure that you outline your expectations. What features do you want? What’s your overall budget?

Then, see if that aligns with what is actually on the market. If you find that a home with the features you want is out of your price range, you may need to consider whether you can compromise. If it’s not worth compromising, then you might come to the conclusion that you want to wait until you’ve saved up more funds to get to that goal.

Perhaps the type of house you’re looking for isn’t turning up results, in which case you’ll also need to reevaluate your options. You could wait and see if eventually the right home pops up, explore other neighborhoods, consider building your own home, or purchase a ‘fixer-upper’ at a lower price and put in the work and budget to remodel it.

Competitive Housing Markets

When the housing market is competitive, that can add stress to the home-buying experience.
If most houses in the area are getting multiple offers, you’ll need to factor that into your approach. A home’s list price may end up being less than what it sells for. If you put in an offer, you will need to think about how much you can reasonably spend on the home.

Also, consider that some bidders may be willing to pay in cash, forgo a home inspection and more. To avoid getting swept up bidding on a house you love based on in-the-moment emotions, lay down ground rules of what you’ll be willing to do before you find that “perfect” house.

[How to Buy in a Tight Real Estate Market]

Some buyers may choose to wait until the market settles down — although you can never know for sure when that may be. Either way, this brings us to our next point: don’t go it alone.

Once you do decide you’re in the market to buy, apply for pre-approval for a home mortgage and work with a local loan officer at Great Midwest Bank for your home loan needs. This step helps you know how much budget you have to work with and provides you another source of local expertise.

It’s also time to find a real estate agent!

Work with a Local Real Estate Agent

Whether you feel confident in your home search or are overwhelmed by all the details, it’s smart to team up with a local real estate agent.

They know the local market best — because it’s their job! They will be able to help you target your home search based on your budget, the features you want in your home, what you don’t want and more.

[How a Great Real Estate Agent Can Help You Buy Your Next Home]

Real estate agents can also give you helpful pointers on how to make a competitive offer that still keeps your best interests in mind. They will also be able to answer questions you have, which can help inform your decision about whether to buy or wait.

Considering Your Own Housing Needs and Financial Circumstances

When you consider whether now is a good time for you to buy, the key phrase is “for you.” Ultimately your decision to buy a home is a personal one. Some things to think about include your current housing situation, financial picture and your goals.

For many people, purchasing a home is not just about the independence and joy of having your own little castle, but the financial benefits that come with it, too.

For those currently renting their living space, buying a home may be a great next step. Consider that in Milwaukee, most 1-bedroom apartments will set you back over $12,000 per year. That is money you won’t get back. If you can afford the down payment on a new house, buying a home can be a wise investment.

It’s your call!

It’s best to be realistic and understand that there may never be a “perfect time” to buy a home — so you need to find for yourself what your “right time” is.

Your needs, goals and circumstances will lead the way in helping you determine whether you should buy a house now or wait. Sometimes you might find that the time to buy is now, even if certain things are not quite lining up how you want them. Other times, it might not feel quite right yet, and that’s okay!

If you can find the right home for you and thoughtfully plan out your financing, it may be time to go for it. Whether you want to buy your first home, your family has outgrown your current home or any other “life” reason — oftentimes you’ll just know in your gut when it’s time to go ahead and buy. Only you can decide!

We’ll be ready to help with your Home Mortgage Loan needs!

If there’s a way we can help you get closer to your homeownership goals, we will find it. Even if a conventional Home Mortgage Loan isn’t the best fit for your needs, we’ll explore your options. Let’s talk about your homeownership goals and help you on your journey home! Apply for a loan online, call, or visit your local Great Midwest Bank branch.