In this current real estate market, the most common question I’ve been asked is whether it’s a good time to buy a home. It’s important to consider the advantages of purchasing a home in the current climate.
Interest rates recorded the lowest rate in history since 1971 during the 2020-2021 COVID-19 pandemic, and they remain historically low. The average mortgage rate during the past 30 years is 7.74%, slightly above current rates at the time of this writing. Locking in a low rate now provides stability, and if rates decrease further, refinancing is always an option.
Seize the opportunity to secure a favorable rate while you can. Date the rate, marry the home.
In today’s market, there may be room for negotiation with sellers who have been on the market for an extended period. You could have the advantage of getting the home inspected, potentially renegotiating repairs, paying less than the list price, and even having the seller cover closing costs. More options and choices await you.
Inflation is expected to continue driving home prices upward. Waiting to purchase means facing a higher purchase price and a larger required down payment.
Additionally, holding off on buying could result in higher mortgage payments due to increased prices. Rather than relying on speculation, let’s take a quick look at current sales prices in the Niceville market. The average sales price from Q1 of 2023 to Q2 saw an increase of 18%.
Renting means paying 100% interest without building any equity. By purchasing a home, you gain an asset that allows you to accumulate equity over time, providing long-term financial benefits.
Purchasing a home is not for everyone and not for everyone’s personal situation. Work with your real estate professional to look at the pros and cons of buying versus renting. Renters are subject to the whims of landlords who may sell the property, increase rent, or choose not to renew leases. Buying a home gives you control and stability, eliminating the uncertainties associated with renting.
Owning real estate offers versatility. You can choose to live in the property, rent it out, refinance to access equity, utilize it as a home office, or sell it as market conditions evolve.
If current mortgage interest rates pose affordability challenges, there are still options available. You can lower your purchase price, explore different mortgage types, increase your down payment with gift money, negotiate a rate buy-down with the seller, or make an informed decision about waiting. A local mortgage lender can provide valuable insights in your home search prior to shopping the market.
Homeowners facing financial difficulties can often pause or reduce mortgage payments through forbearance programs. This flexibility offers a safety net during challenging times.
Owning a home serves as a forced savings account, allowing you to build equity and accumulate wealth over time. Home equity often represents the largest investment for many individuals and offers the most versatility in terms of financial growth.
Ultimately, when someone asks if it is a good time to buy (or sell), the answer, regardless of economic conditions, should be to look at your personal situation and take into consideration the above points along with the advice of your trusted mortgage lender and real estate professional.
*All 2023 data is provided by Flex/MLS as provided by Emerald Coast Association of Realtors and is deemed reliable as of June 22, 2023 but is not guaranteed and should be independently verified.
John Sallman is the Broker at Salt and Light Realty. you can reach him on his cell phone at 850.217.8412