The current real estate market heavily favors sellers. Homes are selling incredibly fast and for record-high prices. It can be frustrating to see home values skyrocket while you are saving up money and working to improve your credit score with the hopes of becoming a homeowner. In some areas, homes that would have sold for $220,000 a couple of years ago are now selling for over $375,000. If you’ve been wondering if you should put off your home search until the market cools down a bit, let’s look at some pros and cons of buying a home in today’s market.
Pros:
• Low Interest Rates: The one saving grace of buying a home in this market is that interest rates are really, really low. This makes your money go further and helps offset the higher purchase price. All signs point to interest rising by the end of the year, so buying now will lock in lower rates.
• You Will Build Equity Fast: With values appreciating more and more every day with no clear signs of a slowdown, you will build equity very quickly if you buy a home today.
• It Will Likely Cost You Money To Wait: Experts do not predict a major dip in the real estate market coming anytime soon. If you buy now, you will save money versus buying a year from now.
Cons:
• Inventory is Low: Between people not wanting to sell during a pandemic, the housing construction slows down, and lack of bank-owned properties on the market, inventory is very low. This means you will not have as many homes to choose from and may end up settling for a home that is not ideal for you or your family.
• Demand is High: You will have a lot of competition if you head out to buy a house in today’s market. Most houses are receiving multiple offers, so you will not have much negotiating power and will likely get caught up in a bidding war.
• You May Need To Waive Contingencies: With so much competition, you will have to get creative in order to get your offer accepted. Many buyers are waiving contingencies in the contract to entice the seller to accept their offer. Contingencies are in place to protect the buyer. Some common examples are the home inspection and the appraisal. It can be very risky to move forward with a home purchase without having these protections in place.
There is no one right answer as to whether you should brave this seller’s market and buy a home. It comes down to your current financial situation and long-term goals. If you plan on living in the home long-term and have the money available to purchase now, go for it. But if you are pushing your budget to its limits and do not see yourself living in the home for more than a couple of years, you may want to hold off on buying.
If you do plan to buy a house today, be prepared for a lot of competition and some frustration. You will need a highly skilled real estate agent and lender on your side to help you navigate through this challenging market.