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Diane Bilke

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Worst Time to Buy a Home?

"Is now a bad time to buy a house?" ~ or ~ "Prices have gotten so high, and with interest rates at *gasp* 5%, I think I will just continue renting and wait for the market to adjust."

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Rent vs Own Buy A House

"Is now a bad time to buy a house?"
~ or ~
"Prices have gotten so high, and with interest rates at *gasp* 5%, I think I will just continue renting and wait for the market to adjust."

These are two refrains that I frequently hear when talking to prospective home buyers. Even if you've been living under the proverbial rock these past few years, you know that rock is worth considerably more today vs 2 years ago, and finding a new rock to live under comes with stiff competition and historic-high prices. Let's look at a few facts and determine if it REALLY IS a bad time to buy a home.

Rising interest rates, war, inflation, historically low for sale inventory, supply chain issues ... the list of contributors to this tough buyer's market is the real deal. And, coming on the heels of a global pandemic, all of them mixed together are perpetuating a perfect storm of house-hunting failures for many would-be buyers.

Rising Interest Rates
Average mortgage rates have climbed from approx 3% to approx 5% from April 2021 to April 2022. This means you will pay a few hundred dollars more each month now, and tens of thousands of dollars more over the life of a 30-year mortgage, than if you had bought a home last year.

"So, wait to buy... right?"
Well, Hold on. That's not the end of the story.

While a 5% APR on a mortgage sounds REALLY high compared to the 3% and lower rates we enjoyed a mere 12 months back, there is one important detail you may be overlooking.

The interest rate on rent is currently sitting at 100%.

You read that right. Every month you pay the same amount, and no matter how many rent payments you make, you will never own anything more than the air within the four walls (and that air only as long as you keep paying rent). To make matters worse, between the strong demand for rental properties and increasing property taxes, your rent WILL undoubtedly increase.

In contrast, with each payment posted on that 5% APR mortgage, the amount of money you owe to the bank DECREASES. Month after glorious month, your debt goes down, while at the same time the value of your property (in all probability) goes up, giving you an equity gain that is akin to having bits of gold automatically deposited in your personal bank vault. And, if for some reason you need to move, you hold Title to that Real Estate, and can then sell your home and realize your equity gain in cash! The action item for this point is to work with a reputable lender to know how much home you can comfortably afford and what steps you need to take to get in the buying position.

You can't win if you don't play, and you can't play if you don't have any dice to roll!

Not Enough Houses for Sale
It's a fact... here in the Austin/Round Rock Metro we now measure housing inventory levels in number of days, not months. According to the Austin Board of REALTORS (ABoR), March 2022 statistics show we have 14 days worth of housing inventory for sale. Yikes!! The Austin Chamber of Commerce reports an average of 648 people move to the Austin area each week. Double Yikes!!! Put these two stats together and the result is extreme competition for homes.

You may have heard tales of open houses with hundreds of interested buyers lined up outside, or that someone in your neighborhood had 35 offers on their house that subsequently sold for $45K over asking. These stories are true. It is a tough time in the home buying trenches. But, there is a flip side to the story. 

The ABoR MLS data for the past 30 days (03/27/22 to 04/27/22) lists 64 Expired properties in the Austin/Round Rock Metro and surrounding communities. They ranged in price from $169K to $8M.

I know, I know... 64 expired house listings and least one of them at 8Million Dollars.
"That doesn't sound helpful."

I argue you're missing the point. Even in this historically strong seller's market, there are houses that Don't. Sell. Further, over the past 7 days ABoR reports 350 properties DECREASED their asking prices! LOWERED PRICES. The takeaway here is, while it won't be a cake walk, there are home buying opportunities.

And, with a proactive buyer's agent at your side, you CAN be successful in your home search.

Hope Springs Eternal
Historically speaking, real estate values tend to rise over time. Areas with an availability of jobs, hospitals, retail and services support strong buyer demand, thus supporting strong home values. Yes, prices are increased dramatically over just a few years ago, but waiting in an attempt to "time the market" may end up costing you dearly in terms of mortgage costs and lost equity gains.

If you need to buy a home to better serve your family's needs or to be closer to work, then Today is A Good Day to Buy. If you would like more information and to discuss how buying now may be the right decision for you, I am here!

And, in case you've missed all of the subtle clues here ..... NOW is the Best Time to Sell Your House!

Are you thinking of selling or buying this year? I can help!

Call or Text me at (817) 291-5046. Or, DM me on the socials @dianebilke.

Thanks for reading!

1: https://themortgagereports.com/61853/30-year-mortgage-rates-chart
2: https://www.abor.com/news-center/market-stats
3: https://www.austinchamber.com/blog/02-08-2022-migration
4: https://www.investopedia.com/articles/mortages-real-estate/11/the-truth-about-the-real-estate-market.asp


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