Buying a house today is difficult for several reasons. First, inventory extremely limitedso it can be difficult for those looking for a home to find a property that suits their needs. But equally important, home prices have skyrocketed nationally, making real estate less affordable for buyers in general.
In fact, according to the latest CoreLogic Home Price Index report, home prices rose 15.4% in May 2021 compared to last year. This is the fourth straight month of double-digit growth.
Start your path to financial success with a bang
Get free access to select products we use to help us meet our financial goals. These fully proven options can be the solution to help boost your credit score, invest more profitably, create an emergency fund, and more.
By submitting your email address, you agree that we will send you monetary tips along with products and services that we believe may be of interest to you. You can unsubscribe at any time. Please read our Privacy statement as well as Terms and Conditions…
Problem for buyers
The fact that house prices have gone up a lot definitely works to the benefit of sellers. But buyers feel pain.
In fact, 82% of current buyers surveyed by CoreLogic believe that home affordability is a major issue today. And this happens at a time when mortgage rates are at such a low level that they are able to compensate to some extent the current rise in house prices.
Should I buy now or wait?
Many buyers are looking to buy a home now because mortgage rates are so competitive and they know they won’t stay that way forever. The problem, however, is that in some markets, homes are selling for $ 100,000 or more above the asking price. And this leaves many buyers unattended.
Plus, many people don’t want to just buy an old home to take advantage of the low mortgage rates. In fact, 33% say they would rather refrain from buying, or not buy at all, than sacrifice the home features they really need.
So what is left then? Well, that depends on how frustrated you are with the process of finding a home.
If you have the desire to keep looking, and in doing so, perhaps you are increasing your savings in order to buy yourself more opportunities, then there is nothing wrong with continuing to search. You never know when a suitable property might hit the market, and you might be lucky to buy it before other buyers come along. interrupt you…
On the other hand, once inventories hit the housing market, house prices should slowly but steadily decline. It may not happen this year, but once it does, home buying becomes a much more affordable prospect.
And if you’re worried that waiting might get you stuck with a higher mortgage rate, know that the Federal Reserve may not raise interest rates until 2023, so mortgage rates should stay good and low until then. Keep in mind that the Fed doesn’t actually set mortgage rates. However, this affects them.
Leaving the housing market when you’re ready to buy is no easy task. But with home prices skyrocketing, this makes sense for a lot of people. Ultimately, you will need to evaluate your personal finance, current life situation and housing search tolerance to determine whether you should continue looking for a home or take a long break and wait for the market to cool down.